Question

At year​ end, the Tangshan China Company balance sheet showed total assets of​ $60 million, total liabilities​ (including preferred​ stock) of​ $45 million, and​ 1,000,000 shares of common stock outstanding. Based on this​ information, Tangshan's book value per share of common stock is

Answer 1

Answer:

The Tangshan's book value per share of common stock is $15

Explanation:

By applying the accounting equation, first we have to compute the value of total equity.

We know that,

Accounting equation is equals to

Total Assets = Total Liabilities + Total Equity

$60 million = $45 million + Total Equity

Total Equity = $60 million - $45 million = $15 million

Hence, total equity is $15 million.

Now the book value of per share of common stock is calculated by applying a formula which is shown below

= Total Equity ÷ Outstanding Shares

= $15,000,000 ÷  1,000,000

= $15

Thus, The Tangshan's book value per share of common stock is $15