1. Is it necessary for a business to use the same method of computing depreciation (a) for all classes of its depreciable assets and (b) in the financial statements and in determining income taxes?

2. A corporation with preferred stock and com-mon stock outstanding has a substantial balance in its retained earnings account at the beginning of the current fiscal year. Although net income for the current year is sufficient to pay the preferred dividend of $150,000 each quarter and a common dividend of $40,000 each quarter, the board of directors declares dividends only on the preferred stock. Suggest possible reasons that the board did not declare dividends on the common stock.