Additional Paid-in Capital
The amount investors pay for stock above its par value, representing a premium paid for shares and appearing in the equity section of the balance sheet.
Additional Paid-in Capital
The amount paid by investors for stock that exceeds its par or stated value, representing a component of shareholders’ equity on the balance sheet.
For instance, if a corporation issues 10,000 shares with a par value of $1 per share at a price of $15 per share, it would record $10,000 as common stock and $140,000 as additional paid-in capital.
Additional paid-in capital represents the investors’ willingness to pay more than the nominal value of shares, reflecting their assessment of the company’s growth potential, earning capacity, or market position. It provides capital for business operations without creating debt obligations.