To encourage independent learning by enabling students to review, synthesize, and self-test their knowledge of capital budgeting concepts and Canada's capital cost allowance (CCA) framework.
To provide a teaching tool for faculty teaching capital budgeting concepts within the CCA framework.
The interactive "INPUT" screen enables you to enter your own capital asset disposition and acquisition scenario for assets belonging to the same CCA class and then explains the scenario's impact on (i) the undepreciated capital cost (UCC) of the asset's class, (ii) taxable income, and (iii) the present value of the incremental (differential) cash flows for capital budgeting purposes.
WWW.CCATAXPVCASH.COM handles three types of decisions: (i) to dispose of Asset-X, (ii) to acquire Asset-Y, and (iii) to dispose of Asset-X and acquire Asset-Y in the same year in a situation where both assets belong to the same CCA class and Asset-X's estimated remaining useful life (ERUL) is shorter than or the same as Asset-Y's. CCATaxPVCash can process replacement scenarios where Asset-Y is acquired to replace Asset-X's operational cash flows, but only if (a) Asset-X is at the end of its useful life or (b) Asset-X's estimated remaining useful live (ERUL) does not differ from Asset-Y's: scenarios where Asset-X and Asset-Y have different ERULs would require additional assumptions regarding 'replacement-chains' and are beyond the scope of this application.
The FORMULA screen presents the formula frequently used in the calculation of the PV of a capital asset's CCA tax shield. This formula's implict assumptions are highlighted.
Please email details of any errors/deficiencies/bugs that you encounter and recommendations for improvement to the following email address.
A big thanks to Adam Bleackley, BCom (Accounting & Finance), MSc, for his income tax and capital investment analysis expertise, and for his attention to detail when testing this learning-application. Thanks also to Professors Eden, Gandhi, and Pedwell for their valuable comments on earlier versions of this application. Any remaining errors and/or bugs are the responsibility of firstname.lastname@example.org .
© Brian Conheady [This application is for educational purposes]