On May 12, 1987, West purchased 6% of Ace Corp.'s outstanding $3 cumulative preferred stock and 7% of Ace's outstanding common stock. These are the only two classes of stock authorized by Ace's charter. Both classes of stock are traded on a national stock exchange. Ace uses the calendar year for financial reporting purposes. During 1987 and 1988, Ace neither declared dividends nor recorded dividends in arrears as a liability on its books. West was disturbed about this and, on February 8, 1989, sent a written demand to examine Ace's books and records to determine Ace's financial condition. Ace has refused to permit West to examine its books and records. As a result of the foregoing, West has made the following assertions: Ace should have recorded the dividends in arrears for 1987 and 1988 as a liability that, in effect, would treat West as a general creditor to the extent of the dividends in arrears. West is entitled to examine Ace's books and records. Required: In separate paragraphs, discuss West's assertions. Indicate whether such assertions are correct and the reasons therefor. Do not consider securities laws. On May 12, 1987, West purchased 6% of Ace Corp.'s outstanding $3 cumulative preferred stock and 7% of Ace's outstanding common stock. These are the only two classes of stock authorized by Ace's charter. Both classes of stock are traded on a national stock exchange. Ace uses the calendar year for financial reporting purposes. During 1987 and 1988, Ace neither declared dividends nor recorded dividends in arrears as a liability on its books. West was disturbed about this and, on February 8, 1989, sent a written demand to examine Ace's books and records to determine Ace's financial condition. Ace has refused to permit West to examine its books and records. As a result of the foregoing, West has made the following assertions: Ace should have recorded the dividends in arrears for 1987 and 1988 as a liability that, in effect, would treat West as a general creditor to the extent of the dividends in arrears. West is entitled to examine Ace's books and records. Required: In separate paragraphs, discuss West's assertions. Indicate whether such assertions are correct and the reasons therefor. Do not consider securities laws