Paid in Capital - in excess of par

posted Feb 4, 2010, 5:47 AM by Prof Kiernan
Paid In Capital (PIC) is the amount that is overpaid (or underpaid) for an item purchased using stock.

Example 1:
If you purchase a $190 iPod touch by exchanging 10 shares of capital stock with a par value of $14
the paid in capital would be a credit of $50 ($14 per share *10 shares = $140)

iPod touch            $190
    Paid in Capital               50
   
Capital stock                140

Example 2:
If you purchase a $290 iPod touch by exchanging 10 shares of capital stock with a par value of $32
the paid in capital would be a debit of $30 ($32 per share *10 shares = $320)

iPod touch            $290
Paid in Capital          30
   
Capital stock                320
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