Issuing Stated Value Stock

When no-par stock is issued and assigned a stated value, its stated value becomes legal capital and is credited to a stated value stock account. Assuming that stated value stock is issued at an amount in excess of stated value (the usual case), the excess is credited to Paid-In Capital in Excess of Stated Value, Common Stock, which is reported in the stockholders’ equity section. To illustrate, a corporation that issues 1,000 shares of no-par common stock having a stated value of $40 per share in return for $50 cash per share records this as follows.