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

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Business

Cole

4 December, 19:57

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

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Virginia Fitzgerald · Answer 1

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