Massive Amusements, an Owner of Theme Parks, Invests $65 Million

question 88

Multiple Choice

Massive Amusements, an owner of theme parks, invests $65 million to build a roller coaster. This can be depreciated using the MACRS schedule shown above. How much less is the depreciation tax shield for year 4 under MACRS depreciation than under 7-year, straight-line depreciation, if the tax rate is 35%?

• A) $974,680
• B) $1,218,350
• C) $2,193,030
• D) $6,091,750

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Definitions:

Balance Sheet

A statement that illustrates a corporation's liabilities, assets, and shareholders' capital at a specified point in time.

Other Assets

Assets not fitting into the standard categories like current or fixed assets, often including long-term investments, patents, or deposits.

Assets Sold

Items of value or resources owned by a company that have been disposed of or sold to another party.

Deficit

Amount by which net income falls short of salary and interest allowance. Also an abnormal, or debit, balance in a partner’s capital account.