I was looking at a publicly-traded company's annual report and I noticed that there was an instance where the income attributed to their common shareholders exceeded their actual firmwide net income of that year. To balance this out, they allocated a loss to their preferred shareholders.
It makes no sense to me how you can allocate any losses at all when your firmwide net income is positive. If so, couldn't they have chosen to allocate any arbitrarily large loss (e.g. a loss of $1B) to their preferred shareholders to completely eradicate their individual taxes then?
From the perspective of the actual cash flow, how exactly do the common shareholders receive their income if it exceeds the firm's income? Do the preferred shareholders have to jointly pay up $21.6M to the common shareholders?