Your fiRm Sells a Machine It Purchased Two Years Ago

question 71

Multiple Choice

Your firm sells a machine it purchased two years ago. The selling price was approximately 50% less than the book value of the machine. As a result of this transaction, your firm has a tax benefit:

• A) in the amount of the tax rate multiplied by the difference between the selling price and the original purchase price
• B) in the amount of the tax rate multiplied by the difference between the selling price and the book value
• C) that is available in the current year only
• D) that is only available for certain types of assets as defined by the CRA
• E) that depends on the composition of the CCA pool to which the asset belongs

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Definitions:

Environmentally Safe Material

Substances or materials that do not cause harm to the environment, including humans, wildlife, and plants.

Expected Payoff

The average return or outcome expected for a given investment or decision under uncertainty.

Prior Probabilities

The probability of an event or hypothesis before new evidence is taken into account, often used in Bayesian analysis.

Videography Business

A business that specializes in the production of video content, including filming, editing, and distributing videos.