| Investment Dictionary: Paid In Capital |
Capital received from investors in exchange for stock. This is recorded as an entry on the balance sheet.
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This term is sometimes also referred to as contributed capital or share capital.
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| Banking Dictionary: Paid-in Capital |
1. Banking. The capital stock of a bank, Federal Reserve Bank, or international development bank subscribed to, and paid by, its stockholders. Paid-in capital is the amount contributed by stockholders to obtain a bank charter and commence business. Federal Reserve Member Banks are required to purchase shares in their district Federal Reserve Bank equal to 6% of their capital and surplus; only 50% of this amount actually is paid. The remainder, or callable capital, can be called at any time.
2. Finance. The difference between par value of a corporation's outstanding shares of stock and current market value. This value is adjusted downward when a corporation repurchases its own stock. Contributions in excess of par value or donations not counted toward capital stock are called capital surplus.
| Wikipedia: Paid in capital |
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Paid in capital, also called contributed capital, refers to the capital contributed to a corporation by investors on top of the par value of capital stock. In other words, the money that a company gets from potential investors in addition to the stated value of the stock.
The definition above is the definition of Additional paid in capital (Paid in capital in excess of par.) Paid in Capital, as a whole, must include Capital stock as well as Additional paid in capital. Use of the abbreviation may be misleading, if the user is not aware of the use of the abbreviation.
Paid in Capital = A + B ; this is all your contributed capital: A = Capital Stock (common plus preferred) & B = Additional paid in capital (Paid in capital in excess of par.)
Additional Paid-in Capital Excess received from stockholders over Par Value or Stated Value of the stock issued; also called contributed capital in excess of par. For example, if 1000 shares of $10 par value common stock is issued at a price of $12 per share, the additional paid-in capital is $2000 (1000 shares x $2). Additional paid-in capital is shown in the Stockholders' Equity section of the balance sheet.
Contributed capital shows what has been invested by stockholders through purchase of stock from the corporation (not through purchase of stock on the open market from other stockholders). Contributed capital, in turn, has two main components: Stated capital, which represents the stated, or par value of the shares, and additional paid-in capital, which represents money paid to the company above the par value.
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 | Investment Dictionary. Copyright ©2000, Investopedia.com - Owned and Operated by Investopedia Inc. All rights reserved. Read more |
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| Banking Dictionary. Dictionary of Banking Terms. Copyright © 2006 by Barron's Educational Series, Inc. All rights reserved. Read more |
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