For each of the following entities, identify the objectives of financial reporting that the entity’s managers might have. In answering, consider who the stakeholders might be and which stakeholder(s) would be most important to the managers. Explain how the objectives of financial reporting would influence the accounting choices made by the managers.

a. A privately owned biotechnology company planning to sell shares to the public and become a public company. The money raised will be used to further develop a technology for the treatment of liver disease.

b. A public company that has been adversely affected by international competition and is trying to receive subsidies from government.

c. A community hospital.

d. A private company that recently hired a new CEO to turn the struggling company around. The CEO receives a small salary, a five percent ownership share in the company, and a bonus based on the company’s performance.

e. A small consulting practice with a single shareholder who is also the only employee.