Payson Company Bought $40,000 Worth of Office Equipment at the Beginning

question 125

Multiple Choice

Payson Company bought $40,000 worth of office equipment at the beginning of Year 1. This equipment has a useful life of eight years and a salvage value at the end of its useful life of $4,000. This equipment is in Class 7 with capital cost allowance (CCA) rate of 15%. The income tax rate is 40%.
- What is the maximum amount of CCA that the company can deduct for tax purposes for Year 1?

• A) $2,700.
• B) $3,000.
• C) $5,400.
• D) $6,000.

---

Definitions:

Value

The importance or utility that something has for an individual or the market price of a good or service.

Horizontal Axis

In graphing, this is the x-axis, which typically represents the independent variable.

Vertical Axis

In a graph or chart, the vertical line or scale along which numerical data is plotted or measured, usually representing quantities.

Straight Line

A direct, shortest path between two points in a plane, often used in mathematics to describe linear functions.