In the previous year O purchased a business

Business Mar 08, 2021

In the previous year O purchased a business. Included in the purchase price was $100,000 for goodwill. Since the business incurred a loss, no discretionary deductions such as CCA, were claimed. What is the maximum CCA deduction that can be claimed in the current year for the goodwill?

Expert Solution

Computation of maximum CCA deduction that can be claimed in the current year for the goodwill:

In CCA (capital cost allowance) class 8 income eligible for the small business deduction is 5%.

So,

Maximum CCA Deduction = $100,000*5% = $5,000

So, maximum CCA deduction that can be claimed in the current year for the goodwill is $5,000.

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