Question

A proprietorship commenced operations on May​ 1, 2020, and will have a calendar fiscal year. On June​ 1, 2020​, the proprietorship acquired goodwill for ​$48,000. Using only this​ information, what is the maximum CCA deduction of the goodwill for the year 2020​?

A. ​$2,416
B. ​$1,692
C. ​$1,611
D. ​$4,800

Answer 1

The maximum CCA deduction of goodwill for the year 2020 would be $2,400.

Step-by-step explanation:

The maximum CCA deduction of the goodwill for the year 2020 can be calculated using the Capital Cost Allowance (CCA) rates as provided by the Canada Revenue Agency (CRA).

Goodwill falls under the Class 14.1 category, which has a CCA rate of 5%. To calculate the CCA deduction, multiply the cost of the goodwill ($48,000) by the CCA rate (5%). Therefore, the maximum CCA deduction of the goodwill for the year 2020 would be $2,400.