When you own common stock in a company, that's an asset for you because you own a fraction of anything the company owns -- no matter how small that fraction might be. Similarly, when a company owns common stock in another company, it also shows up as an asset on its balance sheet. However the common stock of the company itself is classified as stockholder's equity on the balance sheet.
Blaance Sheet Categories
A company's balance sheet is a picture of its financial circumstances at any moment in time, showing how much the company has in assets and how much the company owes in liabilities. Owner's equity -- the book value of the company's shares -- equals the company's assets minus the company's liabilities. For example, if a company has $1 million in assets and $600,000 in debt, the owner's equity is $400,000.
- Photo Credit pablographix/iStock/Getty Images
Is Preferred Stock an Asset or Liability?
Common stockholders and preferred shareholders provide much needed cash to all types of organizations, including stalwart multinational firms and smaller market ...
What Is Common Stock Equity?
What Is Common Stock Equity?. Common stock equity represents ownership rights to a corporation. ... It has three parts: Assets, Liabilities ...
How Is Preferred Stock Classified on the Balance Sheet?
A balance sheet records all assets, liabilities and shareholders' equity a company has at a ... Common stock and preferred stock are...
Are Stocks Considered Liquid Assets?
There are a number of metrics used to evaluate assets. One prominent metric is liquidity. Liquidity is the measurement of how easily...
What Are Shares?
When you purchase a financial asset, you are actually buying shares in that asset. You buy those shares at the share price...
Is a Stockholder's Equity a Liability?
Stockholders' equity equals assets minus liabilities and is the total value of the shareholders' ownership of a ... Investors purchase stock in...