RSM324H1 Chapter Notes - Chapter 6: Application Software, Computer Hardware, Asset
Document Summary
One of the general limitations denies the deduction of any expenditure of a capital nature and, as well, denies the deduction of depreciation and amortization. Depreciation or amortization is the process of allocating the cost of a productive asset over its useful life in order to match its cost against the income that it helps generate. The owner estimate three things with regard to the asset: useful life, salvage value at the end of the useful life, contribution to the business in each year of the useful life. The total cost deducted will be the same because the maximum deducted cannot exceed the original cost of the asset. That all businesses have similar results relating to the purchase of similar assets. The uniform system divides capital assets into two general categories. The first category is referred to as depreciable capital property and includes, primarily, tangible assets, such as equipment.
