A Subsidy

question 132

Multiple Choice

A subsidy:

• A) All of these statements are true.
• B) is a requirement that the government pay an extra amount to producers or consumers of a good.
• C) is used by governments to encourage the production and consumption of a particular good or service.
• D) is used by governments as an alternative to price controls to benefit certain groups without generating a shortage or a surplus.

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Definitions:

Discontinued Item

A component of a company's operations that has been disposed of or is held for sale, and its earnings are separated out on the income statement.

MACRS

Modified Accelerated Cost Recovery System, a method of depreciation for tax purposes in the United States that allows faster write-offs of assets.

Straight-Line

A method of calculating depreciation of an asset, which allocates an equal amount of depreciation to each year of the asset's useful life.

Sum-Of-Years' Digits

A depreciation method that accelerates the expense recognition, using a decreasing fraction of years remaining over the sum of the years' digits.