What is the under estimated capital cost of $800,000 asset after five CCA calculations of 30% declining balance, with the half-year rule?

A. $0
B. $240,000
C. $163,268
D. $145,564

Expert Solution

CCA for first year(half year)=$800,000×15%=$120,000

CCA for second year=($800,000-$120,000)×30%=$680,000×30%=$204,000

CCA for third year=($680,000-$204,000)×30%=$476,000×30%=$142,800

CCA for fourth year=($476,000-$142,800)×30%=$333,200×30%=$99,960

CCA for fifth year=($333,200-$99,960)×30%=$233,240×30%=$69,972

Estimated capital cost after five years=$233,240-$69,972=$163,268

Option C is correct that is $163,268

jeff jeffy answered 2 years ago

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