Discussion Questions: Chapter 15 & 16 : Intermediate Accounting
Please answer each question individually in at least 250 words per question.
- Why do companies offer stock options? Should stock option compensation be included as an expense when calculating an organization’s net income? Explain why or why not. If so, how should the amount of expense be calculated?
- What are some similarities and differences between common stock and preferred stock? As a shareholder, would you want preferred or common stock? Explain why. As a corporation, would you rather issue preferred or common stock? Explain why.
- What are the different types of dividends that a company can pay out? Which type would you prefer? Explain why. When should a company pay dividends? What is the purpose of a stock split? What are some benefits of a stock split for a company? What are some benefits for an investor? What is the effect to the market value of the stock?
- What are the differences between basic and diluted earnings per share? What are the differences between the numerator and the denominator in the basic and diluted earnings per share calculations? As an investor, do you evaluate a company as a potential investment using basic or diluted earnings per share? Explain why.