Paid-in Capital
The amount investors have directly contributed to a corporation in exchange for stock, including both par value and any premium paid above par.
Paid-in Capital
The amount of capital contributed to a corporation by investors in exchange for stock, including both the par value of the shares and any additional amounts paid above par.
For instance, when a startup issues 1 million shares with $0.01 par value at $10 per share, it would record $10,000 as common stock and $9,990,000 as additional paid-in capital, for total paid-in capital of $10 million.
Paid-in capital represents external equity financing rather than internally generated profits. It appears in the shareholders’ equity section of the balance sheet, providing a measure of capital directly invested in the business by shareholders, separate from accumulated earnings from operations.