February 2007
Intermediate to advanced
288 pages
6h 32m
English
book
Crash Course in Accounting and Financial Statement Analysis, Second Edition
by Matan Feldman, Arkady Libman
Content preview from Crash Course in Accounting and Financial Statement Analysis, Second Edition
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Additional Paid-In Capital
Additional paid-in-capital (APIC) represents capital received by a company when its shares are sold above their par value.
When a company issues shares, two entries in the shareholders’ equity section take place (Exhibit 6.21):
Common stock (par value)
APIC
Exhibit 6.21. Apic Represents Capital Received by a Company When its Shares are Sold Above Their Par Value
Source: Used with permission. Microsoft 2005 Annual Report.
Suppose a company issues 1 million shares with par value of $0.10 per share for net proceeds of $20 million. What is the impact on the financial statements?
Common stock total value: 1 million shares × $0.10/share = $100,000
APIC: $20 million – $100,000 = $19.9 million
Cash: $20 million
| Debit | Credit | |
|---|---|---|
| Cash | $20 million | |
| Common stock | $0.1 million | |
| APIC | $19.9 million |
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