If a Leased Asset Were Scrapped from a Continuing CCA

question 65

Multiple Choice

If a leased asset were scrapped from a continuing CCA pool after four years, and its UCC were $10,000 and its salvage is zero, what would the present value of this asset's tax shelter be if the appropriate after-tax borrowing rate is 9%, the CCA rate is 20%, and the tax rate is 40%?

• A)- $2,759
• B)- $1,955
• C)+ $10,000
• D)+ $2,759

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Definitions:

Induce Dipole

The temporary polarization of a molecule caused by the vicinity of a charged object or another polar molecule.

Electron Cloud

A model describing the area around an atomic nucleus where electrons are likely to be found, depicting electron positions as a cloud-like distribution.

Temporary Dipole

A temporary dipole occurs when there is a short-lived imbalance of electron density within a molecule, causing a temporary separation of charges.

Intermolecular Force

The forces of attraction or repulsion which act between neighboring particles (atoms, molecules, or ions).