Calculate the amount of capital cost allowance

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Question - Pronghorn Corp. purchased depreciable assets costing $31,200 on January 2, 2020. For tax purposes, the company uses CCA in a class that has a 30% rate. For financial reporting purposes, the company uses straight-line depreciation over five years. The enacted tax rate is 25% for all years. This depreciation difference is the only reversing difference the company has.

Required - Calculate the amount of capital cost allowance and depreciation expense from 2020 to 2024, as well as the corresponding balances for the carrying amount and undepreciated capital cost of the depreciable assets at the end of each of the years 2020 to 2024. Assume that these assets are considered "eligible equipment" for purposes of Accelerated Investment Incentive (under the AII, instead of using the half-year rule, companies are allowed a first-year deduction using 1.5 times the standard CCA rate).

Reference no: EM132714402

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