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Par or stated value belongs in a dated, class-level equity analysis. Par or stated value is a legal amount assigned to each share. Accounting often credits that amount to the capital-stock account and places the remaining supported proceeds in additional paid-in capital. It does not measure the share's fair value.
Apply it
Issuing 50,000 $0.10-par shares for $12 each produces $5,000 of common stock and $595,000 of additional paid-in capital before issue costs. Later market-price changes do not revise those issuance balances.
Review par or stated value against common stock. Reconcile par or stated value to additional paid in capital, the dated par or stated value evidence, and its final presentation.
Keep the boundary clear
Use the charter and issuance documents for the legal amount. Keep it separate from issue price, liquidation preference, redemption price, book value, and quoted market price.
Authority
Read ASC 505-10-50-5 for par or stated value disclosures.
Put the concept to work
Apply this concept
- Explain and apply par or stated value within a reconciled class-level equity workpaper using supplied authoritative facts.
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- Common stock — Apply
To apply this concept: Required. This prior idea supplies the quantities or classification needed for the current analysis.
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Use this idea next
- Additional paid-in capital — Apply
Required level here: apply. Required. This prior idea supplies the quantities or classification needed for the current analysis.
- Multiple-security issuance — Apply
Required level here: apply. Required. This prior idea supplies the quantities or classification needed for the current analysis.