Canada, Like Most Taxing Authorities, Uses Different Methods for Calculating

question 112

Multiple Choice

Canada, like most taxing authorities, uses different methods for calculating depreciation for tax purposes. The Income Tax Act uses which of the following methods?

• A) accelerated amortization
• B) straight-line and accelerated amortization
• C) straight-line, double declining balance, and accelerated amortization
• D) straight-line and declining balance
• E) double declining balance and accelerated amortization only

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Definitions:

Fiscal Year

A one-year period that companies and governments use for financial reporting and budgeting that is not necessarily aligned with the calendar year.

Assumptions

Fundamental beliefs or statements taken for granted in the planning and decision-making process.

Schedule

A detailed plan or listing, often used in accounting to organize financial information, activities, or obligations.

Effective Interest Method

A way of amortizing the cost of a bond premium or discount over its life, giving a constant rate of interest over the period.