Which of the Following Statements Best Describes CCA

question 61

Multiple Choice

Which of the following statements best describes CCA?

• A) Since CCA deduction is not a cash expense, it plays no role in capital budgeting.
• B) The CCA method use a specific mandated CCA rate for each asset class.
• C) The CCA deduction is equal to the year-end UCC for the pool divided by the mandated CCA rate.
• D) The CCA method allows that the net capital cost of an asset is added to the pool in the year the asset is put in use.

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Definitions:

Lease Payments

Regular payments made by a lessee to a lessor for the use of an asset over a specified period as per a lease agreement.

Marginal Tax Rates

The tax rate applicable to the last dollar of income earned, reflecting the percentage of tax applied to your income for each tax bracket in which you qualify.

Straight-Line Depreciation

A method of allocating the cost of a tangible asset evenly over its useful life.

Net Advantage to Leasing

This refers to the total financial benefits that a company might gain from leasing assets rather than purchasing them outright, taking into account tax advantages, cash flow, and risk factors.