No-Par-Value Capital Stock
Barron's Accounting Dictionary:
Top
No-Par-Value Capital Stock
Shares designated in the charter that do not have a par or assigned value printed on the stock certificate.
However, some states authorize the issuance of no-par stock with a stated value. When no-par stock is issued, the entry is to debit cash and credit capital stock for the total proceeds received. No premium is required on the capital stock account. An advantage of no-par stock is that it avoids a contingent liability to stockholders in the case of a stock discount. One of the original reasons for no-par stock was to avoid state taxes based on par value, but states will sometimes tax nopar stock as if it had par value. A disadvantage of no-par stock is that inept directors may lower the value of outstanding shares by accepting minimal prices on new issues.
However, some states authorize the issuance of no-par stock with a stated value. When no-par stock is issued, the entry is to debit cash and credit capital stock for the total proceeds received. No premium is required on the capital stock account. An advantage of no-par stock is that it avoids a contingent liability to stockholders in the case of a stock discount. One of the original reasons for no-par stock was to avoid state taxes based on par value, but states will sometimes tax nopar stock as if it had par value. A disadvantage of no-par stock is that inept directors may lower the value of outstanding shares by accepting minimal prices on new issues.
| Next-In, First-Out (NIFO), Newyork Stock Exchange (NYSE), New Economy | |
| Nodal Cost Flow Network, Node, Nominal Account |
Post a question - any question - to the WikiAnswers community:
Copyrights:
Barron's Accounting Dictionary
Dictionary of Accounting Terms. Copyright © 2010 by Barron's Educational Series, Inc. All rights reserved.
Read more
Mentioned in
Impaired Capital
(business term)
Surplus
(in accounting)
Common Stock
(in accounting)
Capital Surplus
(finance term)
» More