question archive Younger Company has outstanding both common stock and non participating stock , noncumulative preferred stock
Younger Company has outstanding both common stock and non participating stock , noncumulative preferred stock
Subject:AccountingPrice: Bought3
Younger Company has outstanding both common stock and non participating
stock , noncumulative preferred stock. The liquidation value of the preferred is equal to its par value. The book value per share of the common stock is unaffected by
A)the declaration of a stock dividend on preferred payable in preferred stock when the market price of the preferred is equal to its par value
B) the declaration of a stock dividend on common stock payable in common stock when the market price of the common is equal to its par vlue
C) the payment of previously declared cash dividend on the common stock
D) a 2 for 1 split of the common stock
The answer is C. I don't get because the formula of book value per share is common shareholder's equity divide by outstanding shares, A and B involve in preferred stock which is not reflected in this formula. Why A and B affect but C is unaffected. I need detailed explanation on A, B and C choice why each is right or wrong, respectively .Hopefully use formula to explain would be more effective. Thanks.
