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5 October, 15:55

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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  1. 5 October, 16:17
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    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
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