Concept
Stock Issuance at Par
When stock is issued at par value, the full amount goes to Common Stock. Example: Issue 1,000 shares with $1 par at $1 per share. Debit Cash $1,000, Credit Common Stock $1,000.
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FARLesson 2 of 5
Issuing Stock
Example
Stock Issuance Above Par
Issue 1,000 shares with $1 par at $25 per share. Debit Cash $25,000. Credit Common Stock $1,000 (par value). Credit APIC $24,000 (the excess). APIC is sometimes called Paid-In Capital in Excess of Par.
Example
Stock Issuance for Non-Cash
If stock is issued for land appraised at $50,000 (1,000 shares, $5 par): Debit Land $50,000, Credit Common Stock $5,000, Credit APIC $45,000. Use the fair value of the asset received or the stock issued, whichever is more reliably determinable.
Key Point
No-Par Stock
Some states allow no-par stock. The entire issue price is credited to Common Stock (no APIC). If there is a stated value, it functions like par value.
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