When the corporation has both preferred and common stock,the steps to compute book value for common stock would be:

Question

Quizplus · Accepted Answer

When a corporation has both preferred and common stock, the preferred stockholders have a prior claim on the assets and earnings of the company, so their book value must be calculated first. The remainder of the stockholders' equity is then assigned to the common stock, which would give us the book value for common stock. Therefore, choice B is the correct answer.

When the Corporation Has Both Preferred and Common Stock,the Steps