Question
In: Accounting
A proprietorship commenced operations on May 1,2020 and will have a calendar fiscal year. On June...
A proprietorship commenced operations on May 1,2020 and will have a calendar fiscal year. On June 1, 2020, the proprietorship acquired goodwill for $60,000.
What is the maximum CCA deduction of the goodwill for the year 2020?
Solutions
Expert Solution
Capital Cost Allowance (CCA) is an annual deduction in the Canadian income tax code that can be claimed on depreciable assets when figuring taxable income under the umbrella of the Income Tax Act. Claimed as a percentage of the asset's cost for a number of years, the CCA is typically allowed for purchases that are expected to last for several years, such as buildings. However, the deduction is not allowed in full for a single year; rather, the full cost is spread out over a number of years on tax returns.
Class 14.1 property acquired after 2017 is allowed to be depreciated at a rate of 5% per annum, subject to the half-year rule that restricts CCA on net additions to the class in the year to one-half of the normal claim. A taxpayer is not required to claim the maximum allowable deduction in a taxation year but rather can defer the claim, or any portion of it, to a subsequent year.
Since Goodwill is covered under Class 14- a CCA rate of 5% is applicable on $60,000. However after applying half year rule
Max CCA for 2020 = 5% *60,000/2 = $1500
ekkarill92 answered 2 years agoRelated Solutions
Define what a fiscal year is. Is it the same as a calendar year? What are...
Define what a fiscal year is. Is it the same as a calendar year?
What are the steps in QuickBooks for closing a fiscal year? Include
at least one online source with your response.
Malo Inc. uses a fiscal year ending June 30. On May 29, Malo received a check...
Malo Inc. uses a fiscal year ending June 30. On May 29, Malo
received a check for $3,900 from a business that leases parking
spaces in Malo’s parking garage. This payment was for the
three-month period beginning June 1. On June 15, Malo sent an
invoice for $5,500 to a customer for services rendered during May
and June. Malo received payment from the customer on July 3.
A) If Malo is a cash basis taxpayer, how much income should it...
Malo Inc. uses a fiscal year ending June 30. On May 29, Malo received a check...
Malo Inc. uses a fiscal year ending June 30. On May 29, Malo
received a check for $3,900 from a business that leases parking
spaces in Malo’s parking garage. This payment was for the
three-month period beginning June 1. On June 15, Malo sent an
invoice for $5,500 to a customer for services rendered during May
and June. Malo received payment from the customer on July 3.
If Malo is a cash basis taxpayer, how much income should it
recognize...
Question 2 Hydropure Ltd commenced operations at the beginning of the current year. One of the...
Question 2
Hydropure Ltd commenced operations at the beginning of the
current year. One of the company’s products, an alkaline
antioxidant water filter, sells for $299 per unit. Information
related to the current year’s activities are as follows:
$
Variable costs per unit:
Direct materials 40
Direct labour 74
Manufacturing overhead 96
Annual fixed costs:
Manufacturing overhead 700,000
Selling and administrative 880,000
Production and sales activity:
Production (units) 25,000
Sales (units) 20,000
Hydropure Ltd carries its finished goods inventory...
Reese, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late...
Reese, a calendar-year
taxpayer, uses the cash method of accounting for her sole
proprietorship. In late December, she received a $15,000 bill from
her accountant for consulting services related to her small
business. Reese can pay the $15,000 bill anytime before January 30
of next year without penalty. Assume Reese’s marginal tax rate is
32 percent this year and will be 37 percent next year, and that she
can earn an after-tax rate of return of 9 percent on her...
1. Manny, a calendar-year taxpayer, uses the cash method of accounting for his sole proprietorship. In...
1. Manny, a calendar-year taxpayer, uses the cash method of
accounting for his sole proprietorship. In late December he
performed $21,000 of legal services for a client. Manny typically
requires his clients to pay his bills immediately upon receipt.
Assume Manny’s marginal tax rate is 32 percent this year and next
year, and that he can earn an after-tax rate of return of 6 percent
on his investments. What is the net benefit of collecting the bill
in December?
2.Jonah...
Hank, a calendar-year taxpayer, uses the cash method of accounting for his sole proprietorship. In late...
Hank, a calendar-year taxpayer, uses the cash method of
accounting for his sole proprietorship. In late December, he
performed $21,000 of legal services for a client. Hank typically
requires his clients to pay his bills immediately upon receipt.
Assume his marginal tax rate is 32 percent this year and will be 37
percent next year, and that he can earn an after-tax rate of return
of 4 percent on his investments. a. What is the after-tax income if
Hank sends...
Isabel, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late...
Isabel, a calendar-year taxpayer, uses the cash method of
accounting for her sole proprietorship. In late December she
received a $75,000 bill from her accountant for consulting services
related to her small business. Isabel can pay the $75,000 bill
anytime before January 30 of next year without penalty. Assume her
marginal tax rate is 37 percent this year and next year, and that
she can earn an after-tax rate of return of 10 percent on her
investments.
a. What is...
Reese, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late...
Reese, a calendar-year taxpayer, uses the cash method of
accounting for her sole proprietorship. In late December, she
received a $35,000 bill from her accountant for consulting services
related to her small business. Reese can pay the $35,000 bill
anytime before January 30 of next year without penalty. Assume
Reese’s marginal tax rate is 30 percent this year and will be 40
percent next year, and that she can earn an after-tax rate of
return of 10 percent on her...
Manny, a calendar-year taxpayer, uses the cash method of accounting for his sole proprietorship. In late...
Manny, a calendar-year taxpayer, uses the cash method of
accounting for his sole proprietorship. In late December he
performed $24,000 of legal services for a client. Manny typically
requires his clients to pay his bills immediately upon receipt.
Assume Manny’s marginal tax rate is 37 percent this year and next
year, and that he can earn an after-tax rate of return of 7 percent
on his investments.
a. What is the after-tax income if Manny sends his client the
bill...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Describe the principles and operations of movement sensors: Doppler-Effect Velocity sensor and Spring-Mass Accelerometor; State the...
- This is all one question, thank you so much in advance. The Bigbee Bottling Company is...
- For Questions 1-3: consider the following code: public class A { private int number; protected String...
- You are tasked with assessing the health department’s intervention program in preventing recurrence of acute alcohol...
- Compare the MOSFET, JFET , and BJT and identify the reasons these devices behave differently. What...
- How would you use SAS Enterprise Miner to create a neural network model of your example?
- Explain the use of neural networking modeling in predictive analytics.
ADVERTISEMENT