Question

Evaluate each of the following statements (TRUE/FALSE) and
provide a **one-two sentence(s) long** explanation for
your answer (graphs, charts, formulas, and short calculations can
be used as an explanation, too). Keep in mind that a statement is
false if there is at least one case when the argument does not
hold. To receive full credit for each statement, both the answer
and the explanation must be correct.

A firm has purchased a new piece of equipment for $420,000. The equipment falls under class 10 and has the applicable CCA rate of 30%. If post-Nov 2018 CCA rules apply to the purchase, the book value of the equipment three years after the purchase will be smaller than its book value three years after the purchase under the pre-Nov 2018 CCA rules.

Answer #1

True.

Post November 2018, under the Accelerated Investment As a result, eligible property currently subject to the half-year rule will, in essence, qualify for an enhanced CCA equal to three times the normal first-year deduction.

Pre November 2018 | Post November 2018 | |||||

Year | Book value $ | Rate | CCA $ | Book value $ | Rate | CCA $ |

1 | 420000 | 15% | 63000 | 420000 | 45% | 189000 |

2 | 357000 | 30% | 107100 | 231000 | 30% | 69300 |

3 | 249900 | 30% | 74970 | 161700 | 30% | 48510 |

4 | 174930 | 113190 |

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