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.

One of the two main categories on the balance sheet under owner’s equity (the other is retained earnings). 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.