On January 3, 2014, Goglin Inc. (Goglin)

purchased a corporate aircraft to transport executive to the company’s construction projects across the county. The aircraft cost $2,225,000, which was capitalized for accounting and tax purposes. Goglin’s aircraft is classified as class 9, which has a CCA rate of 25 percent declining balance. Goglin’s year-end is December 31.

Required:

a. What is the maximum amount of CCA that could be claimed for tax purposes in 2014? Explain.

b. What is the maximum amount of CCA that could be claimed for tax purposes in 2015? Explain.

c. If Goglin decides to depreciate the equipment on a straight-line basis over 15 years, what would the depreciation expense be in 2014?

d. How does the useful life estimated by Goglin’s management affect the amount of CCA that can be claimed? Explain.

e. Why are the amounts calculated in

(a) and

(c) likely different? Explain.