Snowflake Corporation's Shareholders' Equity Section at December 31, 2019 Appears

question 17

Short Answer

Snowflake Corporation's shareholders' equity section at December 31, 2019 appears below:
Shareholders' equity Instructions
In 2020 Snowflake repurchases 2,000 shares. Please treat the following two situations independently.
a) If the shares are repurchased at $9 / share, record this transaction. What is the impact of this repurchase on the shareholders' equity accounts?
b) If the shares are repurchased at $11 / share, record this transaction. What is the impact of this repurchase on the shareholders' equity accounts?

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Definitions:

Adverse Selection

Adverse selection is a situation in which an asymmetry of information between buyers and sellers results in the failure to facilitate optimal market outcomes, often seen in insurance markets where those most likely to claim insurance are also the most likely to purchase it.

Moral Hazard

The tendency of a person or entity to take risks because the negative consequences of the risk will be borne by another party.

Unobservable Actions

Actions taken by individuals or entities that cannot be seen or monitored by others, often discussed in the context of economics or game theory.

Moral Hazard

A situation where one party is more likely to take risks because the negative consequences of the risk will be borne by another party.