Five identical vehicles which cost $500,000 (total) are acquired on April 1, 2018. Their estimated residual...

Five identical vehicles which cost $500,000 (total) are acquired on April 1, 2018. Their estimated residual value is $20,000 and expected life is eight years. These assets are Class 10 with a maximum CCA rate of 30%. The company has a December 31 year end. Required Calculate the depreciation expense/CCA (to the nearest dollar) by each of the following methods:

1. Straight-line for 2018

2. Double declining-balance for 2019

3. Maximum Capital cost allowance for 2019

Expert Solution

hi, please find below the answer let me know if you need any clarification-

answer 1)	Straight line annual depreciation = (Cost - salvage value)/useful life of asset
	=(500000-20000)/8			60000
	Depreciation for 2018 is for 9 month =
	=60000*9/12			45000


answer 2)	Double declining rate = (1/8)*200%			25%

		Beginning value	Depreciation	Depreciation	year end value
	2018	500000	=50000025%9/12	93,750	406,250
	2019	406,250	=406250*25%	101562.50	304,688

	therefor 2019 depreciation under double declining method =					101562.50


answer 3)	CCA rate = 30%

		Beginning value	Depreciation	Depreciation	year end value
	2018	500000	=500000*30%/2	75000	425,000
	2019	425,000	=425000*30%	127500	297,500

	therefor 2019 depreciation under CCA method =				127500

ekkarill92 answered 1 year ago

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