Question

The amount received over and above the par value is credited to which account?

Answer 1

Par value stock is a type of common or preferred stock having a nominal amount (known as par value) attached to each of its share. Par value is the per share legal capital of the company that is usually printed on the face of the stock certificate. It is also known as stated value and face value.

A company is free to choose any amount as the par value for its share but companies mostly choose a very low amount. For example, the stock of Microsoft has a par value of $0.00000625 per share and Ford’s stock has a par value of $0.01 per share.

Par value of stock is different from its market value. The market price of the stock of well established companies is usually much higher than its par value.