An Asset with a Purchase Cost of $96 422 and a CCA

question 56

Multiple Choice

An asset with a purchase cost of $96 422 and a CCA rate of 40% has a market value of $4 000 at the end of its 10-year life. Assume this asset is the only asset in its class. Which of the following statements about this situation is correct?

• A) There is a recapture of $2 704
• B) There is a terminal loss of $2 467
• C) There is a recapture of $2 133
• D) There is a terminal loss of $1 736

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Definitions:

Marginal Revenue Product

The additional revenue generated by employing one more unit of a resource, factor, or input.

Wage Rate

The amount of compensation paid to an employee per unit of time worked, often expressed as an hourly rate.

Marginal Physical Product

The additional output resulting from using one more unit of a physical input, holding other inputs constant, in the production process.

Total Revenue

The price of a good or service multiplied by the number of units sold.