Final answer:
Bauer Software's reported Total Common Equity on the balance sheet is $5,125,000, reflecting shareholder ownership in the company calculated as the residual interest in the firm's assets after liabilities.
Step-by-step explanation:
The value of Total Common Equity reported on Bauer Software’s balance sheet is $5,125,000. This figure represents the total equity belonging to shareholders and is the value of the owners' interest in the firm. It can be calculated by subtracting total liabilities from total assets; or it can be found as the sum of share capital and retained earnings minus treasury shares.
Looking at various examples of balance sheets, Net Worth can also be referred to as equity, which represents the residual interest in the company’s assets after deducting liabilities. In the case of Freda’s house, her equity is the total value because she has no liabilities against it: $250,000. Meanwhile, Frank’s equity in his house is calculated by deducting his remaining mortgage from the value of the house, resulting in $100,000 of equity.