RSM324H1 Chapter 6: CHAPTER 6-5
15 Feb 2017
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Document Summary
Chapter 6 the acquisition, use, and disposal of depreciable property. Cost allocation: gaap attempts to allocate the capital cost of an asset over its useful life in relation to its contribution to the revenue-earning process. The life expectancy of similar types of assets will vary considerably from taxpayer to taxpayer, depending on the manner in which the assets are used. Even within the same entity, similar assets may be used in different ways: the tax system arbitrarily sets the rate and the method of amortization/depreciation (cca) for similar assets. The arbitrary cca rates imposed by the ita usually are determined on the basis of the average normal use of particular types of assets, but in some cases, they are chosen to implement certain fiscal and economic policies. Proceeds above or below the depreciated value remain in the pool and are recognized either when the pool becomes negative or when all assets have been disposed of.
