BU357 Chapter Notes - Chapter 5: Capital Cost Allowance, Capital Cost, Matching Principle
Document Summary
Chapter 5: depreciable capital property and eligible capital. Depreciable property and capital cost allowance ( cca : depreciation is replaced by the capital cost allowanced, must amortize because according to gaap have to do matching principle o. Eligible capital property ( ecp ) and cumulative eligible capital. Amount ( ceca : ecp: this includes intangibles like goodwill, patents and unlimited life franchises and incorporation costs. It usually is 75 % of the cost: ceca: this is the common pool that ecp is placed in and subject to a depreciation rate of 7%. If the balance is (-) then move it up to 0. If there are no assets in the class and it"s (+) classify this amount as a terminal loss and deduct from income. The act assigns various types of assets to specific classes. Each class has a specific rate attached to it: signifies the maximum deductible in a year.
