Sample CCA Rates and Classes Are Presented as Follows

question 31

Multiple Choice

Sample CCA Rates and Classes are presented as follows: What does the number "20" in the CCA Rate column mean?

• A)A firm can claim a 20% depreciation rate per year for an asset such as machinery, office furniture, and equipment during its service life.
• B)A firm can claim a 20% depreciation rate per year for an asset such as machinery, office furniture, and equipment beginning in the second half of the year after purchase of that asset.
• C)A firm can fully depreciate an asset such as machinery, office furniture, and equipment in 5 years from the time it is purchased using the depreciation rate of 20% per year.
• D)A firm can claim a 20% depreciation rate on half of the capital cost of a new asset such as machinery, office furniture and equipment in the year of purchase of that asset, while the other half is included in the following year.
• E)A firm can only depreciate an asset such as machinery, office furniture, and equipment with the rate of 20% in the first year of purchase of that asset.

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Definitions:

Segmented Income Statement

An income statement broken down into segments, such as product lines or geographical areas, to analyze profitability.

Absorption Costing

An accounting technique that assigns the total manufacturing costs, including direct materials, direct labor, and both kinds of manufacturing overhead (fixed and variable), to a product’s cost.

Gross Margin

The difference between sales revenue and cost of goods sold, expressed as a percentage of sales revenue, indicating the financial health and profitability of a business.

Absorption Costing

An approach to costing that encompasses all costs associated with manufacturing, including direct materials, direct labor, as well as variable and fixed manufacturing overheads, in the product cost.