Capital Surplus
The excess amount investors pay for stock above its par value, representing a premium that shareholders are willing to pay for ownership in the company.
Capital Surplus
An older term for additional paid-in capital, representing amounts paid by investors for stock in excess of its par or stated value.
For instance, if investors pay $25 per share for stock with a $1 par value, the $24 difference per share would be recorded as capital surplus in the shareholders’ equity section of the balance sheet.
Capital surplus increases the equity base without creating additional obligations. This capital can be used for business expansion, debt reduction, or other corporate purposes. While the term “capital surplus” appears in older accounting literature, modern financial statements typically use “additional paid-in capital” to describe this component of shareholders’ equity.