Five independent situations follow:

1. Dawn Addington, a student looking for summer work, has opened a vegetable stand along a busy local highway.

Each morning, she buys produce from local farmers, then sells it in the afternoon as people return home from work.

2. Joseph Counsell and Sabra Surkis each own a bike shop. They have decided to combine their businesses and try to expand their operations to include skis and snowboards. They expect that in the coming year they will need funds to expand their operations.

3. Three chemistry professors have formed a business that uses bacteria to clean up toxic waste sites. Each has contributed an equal amount of cash and knowledge to the venture. The use of bacteria in this situation is experimental, and legal obligations could result.

4. Abdul Rahim has run a successful but small cooperative health and organic food store for over five years. The increased sales at his store have made him believe that the time is right to open a chain of health and organic food stores across the country. Of course, this will require a substantial investment for inventory and property, plant, and equipment, as well as for employees and other resources. Abdul has no savings or personal assets.

5. Mary Emery, Richard Goedde, and Jigme Tshering recently graduated with law degrees. They have decided to start a law practice in their hometown.

Instructions

(a) In each of the above situations, explain what form of organization the business is likely to take: proprietorship, partnership, public corporation, or private corporation. Give reasons for your choice.

(b) Indicate which type of accounting standards-IFRS or ASPE-that each of the business organizations you identified in (a) is most likely to use for external reporting purposes.