Question 1:
(a) Your friend Dick Wasson cannot understand how the characteristic of corporation management is both an advantage and a disadvantage. Clarify this problem for Dick.
(b) Identify and explain two other disadvantages of a corporation.
Question 2: What are the basic ownership rights of common stockholders in the absence of restrictive provisions?
Question 3: What factors help determine the market value of stock?
Question 4: The board of directors is considering a stock split or a stock dividend. They understand that total stockholders' equity will remain the same under either action. However, they are not sure of the different effects of the two types of actions on other aspects of stockholders' equity.
Explain the differences to the directors.
Question 5: What is the cost of an investment in stock?
Question 6:
(a) When should a long-term investment in common stock be accounted for by the equity method? (b) When is revenue recognized under this method?
Question 7: What is the proper statement presentation of the account Unrealized Loss-Equity?