A Factory Was Gutted by Fire and None of Its

question 18

Multiple Choice

A factory was gutted by fire and none of its machinery was salvaged. The machinery was underinsured. The closing balance of the undepreciated capital cost (UCC) account to which the machinery had belonged was $9,750,000 of which $1,113,500 represented the lost assets. The CCA rate on this asset class is 30%. On the year's income tax return, the company

• A) Can claim $3,704,450 to realize the full CCA on the lost assets
• B) Can claim $2,590,950
• C) Cannot use any portion of the $1,113,500 nor can it use it in the future as the assets no longer exist
• D) Can claim $2,925,000
• E) Cannot use any portion of the $1,113,500 until replacement assets have been purchased

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Definitions:

Delivery Placenta

The stage of childbirth where the placenta, the organ that nourished the baby in the womb, is expelled from the uterus after the baby is born.

Umbilical Cord

A flexible cord-like structure containing blood vessels that connect a fetus in the uterus to the placenta, delivering nutrients and removing waste.

Hemorrhage

Excessive bleeding or blood loss, which can be internal or external and is a critical condition requiring immediate medical attention.

Perineal Trauma

Injury to the perineum, the area between the genitals and the anus, often occurring during childbirth.