If the Asset Described in Above Question Had a CCA

question 105

Multiple Choice

If the asset described in above Question had a CCA rate of 30%, with the usual half-year rule, and were leased for 5 years, how would the lessee treat the five years of CCA? The lessee tax rate is 40%.The asset class uses declining balance.

• A)lessee would calculate the CCA amounts for each of the five years, apply the tax rate against these amounts, and show these amounts as cash outflows.
• B)lessee would calculate the CCA amounts for the entire life of the asset, and show those amounts as cash flows.
• C)lessee would ignore the CCA, since it is the lessor's financial province.
• D)lessee would treat the CCA calculations for each of the five years of the lease as cash inflows for the lessor.

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Definitions:

Distributive Justice

The degree to which people think outcomes are fair.

Degree Perceive

The extent to which an individual is aware of or understands a certain situation or phenomenon.

Organizational Justice

The extent to which employees perceive workplace procedures, interactions, and outcomes to be fair in nature.

Distributive Justice

The perceived fairness of the allocation or distribution of resources among individuals or groups.