0
Book value is the value that is written into a company's books for as asset. Par value, is the face value of an asset, as it is entered into the company's charter. The difference between the two is where it is entered, and how one arrives at the figure.
Wiki User
∙ 9y ago
Add your answer:
Earn +20 pts
What is a discount on bonds payable account in accounting?
All bonds have a stated or "par" value, which is the value that the bond will hold after the bond term is completed at maturity (par value is usually $1000 per bond). When a bond is issued at a discount, it means that a company issued the bond for less than the par value (i.e less than $1000). The original discount is calculated as the difference between the par value and the bond sale price, and it is amortized over the life of the bond.
The Paid-in Capital in Excess of Par Value is increased in the accounting records when?
Paid-in Capital in Excess of Par Value in increased in accounting records when the value of a corporation's shares exceeds the par value of those shares. The latter occurs when investors purchase share from the corporation instead of from other shareholders.
What is the meaning of issue shares at par?
Issue of shares at par - Shares are said to be issued at par when they are issued at a price equal to the face value. For example if the face value of a share is $100 and issue price is also $100 than the share will be said as thae share has been issued at par.
What does paid in capital account represent?
par value of common and preferred stock+additional paid in capital(amount in excess of par)
What is the journal entry for a stock issue?
Issuing Par Value Common Stock for Cash (assume par value is $1) dr. Cash $1.00 cr. Common Stock $1.00 to record issuance of 1 share of $1 par common stock if sold for more than par value (Assuming $5) dr. Cash $5 cr. Common Stock $1 Paid-in Capital in excess of par $4 to record issuance of 1 share of common stock in excess of par.
What is the difference between the bond's principal and the bond's par value?
Shaken not stirred.
Why does the market price of outstanding issues often vary from par?
There is no correlation between PAR and MARKET PRICE . Par value was the assigned value of a share when the company was set up. There can be par value shares and no par value shares. After the first second, the value of that share has changed from the time it was identified as a share or issued as an outstanding share.
What is a discount on bonds payable account in accounting?
All bonds have a stated or "par" value, which is the value that the bond will hold after the bond term is completed at maturity (par value is usually $1000 per bond). When a bond is issued at a discount, it means that a company issued the bond for less than the par value (i.e less than $1000). The original discount is calculated as the difference between the par value and the bond sale price, and it is amortized over the life of the bond.
Does common stocks have par value after listing in stock market?
par value of a stock legally disappear after a company published its 1st financial statement. and remain with 2 values only : market value and book value
The book value of the shareholders' ownership is represented by?
The sum of the par value of common stock, the capital surplus and the accumulated retained earnings.
Do shares in Australian company come with a par value?
No, Australian companies do not have a par value (or nominal value) for their shares. The concept of par value was abolished by law in Australia in 1998.
What is par value shares?
If a share costs 95 pence to buy, then that is its par value.
What is par value per share?
If a share costs 95 pence to buy, then that is its par value.
What is a stock's par value?
A stock's par value is the monetary amount assigned to the share of stock.
Is par value the same as fair value?
No.
What is the par value of an asset?
The par value of an asset is the price that was paid for it or the stated price, without consideration of markets pressures.For example, the par value of a US Treasury Bond set at $100,000 and paying 5% interest has a par value of $100,000. The market value may be higher or lower depending on financial market conditions.
What is the rational for adopting the concept of no par value shares in Ghana?
The adoption of no par value shres is because of the following limitations of par value shares 1 This section provides a brief overview of the requirement for par value, as seen in its historical perspective, and as it applies today. It also describes the more significant issues that requiring par value and retiring the concept give rise to. 2 It is important to emphasise from the outset that there is no essential difference between a share of no par value and one having a par value. Both represent a share, being a fraction or an aliquot part of the equity, but the par value share has attached to it a label of value, and the share without par value does not. In a par value system, it is usual to state the share capital this way: "The share capital is $x divided into y shares of $z each" The share therefore has a label proclaiming that its par value is $z. On the other hand a no-par system would simply represent the capital as: "$x divided into y shares". 3 Par value (or nominal value, as it is also called) is the minimum price at which shares can generally be issued. Where shares are issued above the par value, the amount in excess of the par value is called the share premium, and is separately accounted for. All shares of a class have the same par value, and this generally remains unchanged in the life of the company. 4 The par value is shown on the financial statements as the share capital of the company. These were the statements that were said to be relied on by customers and financial institutions that extended credit to the company and potential subscribers to shares in the company. The theory is that par value and the statutory framework in which it operates is necessary in order to protect creditors and shareholders. 5 The way in which the concept of "par" is said to protect creditors' interests is principally as follows: (a) The par value of a company's shares provides a base of subscribed share capital that cannot be repaid to shareholders except with the sanction of the court - or, in the case of a liability to pay the unpaid part of the par value, cannot be released by the company without the sanction of the court. It was therefore regarded as a cushion of solvency for the trading activities of the company. (b) Par value assists creditors to assess whether a company has adequate capital by showing the minimum amount that an applicant for a share has to contribute to the company. 6 It is said to protect shareholders in these ways: (a) It protects existing shareholders by ensuring that companies do not issue new shares below the floor price (par value) of existing ones, thereby reducing the possibility of dilution of the fractions of ownership held by earlier allottees (called "share watering").4 (b) It fixes the maximum amount that a shareholder in a company limited by shares is statutorily obliged to pay for new shares. The actual share price, and the amount of any premium over par, would be a matter for agreement between the parties. 7 The weight of legal opinion is that the theory of par value is not borne out in practice. On the contrary, the par label is said to stand in the way of recognising the ordinary share in a company for what it really is: a fraction of the equity of the company. Conceivably it is potentially deceptive, and can be used to mislead the less sophisticated investor. The object of a change to no-par is not to add any suggestion of a value that is more true or real, but to remove a label that has little to do with the intrinsic value of the share. 8 The concept of par value is also said to add unnecessary complexity to company accounting and the financial statements of companies. The increasing use in loan agreements and other creditors' agreements of financial covenants on the company, including limitation on the circumstances under which the company could use its funds to pay dividends or other distributions to shareholders or to repurchase its own shares, means that the division of the company's equity between "capital" and "surplus" has become for such creditors a matter of academic interest only. 9 The expression of a dividend as a percentage of the par value is also said to illustrate the unreality of the par value system. For example, if a 5% dividend is declared in respect of a share of $1.00 par value, the dividend that an investor who has paid $10 for the share is 5 cents (ie 0.5% of his investment), not 50 cents. A dividend declared as a percentage of par value (in the example 5%) can be deceptive, while a declaration in terms of money (5 cents) makes obvious the real position. 10 There is a clear growing recognition and acceptance of the validity of no-par value shares, and a move towards its adoption in place of par value shares.
