per share value sometimes assigned to no-par stock by the corporation. It defines the legal capital of the corporation. It is the amount credited to the no-par capital stock account. A typical journal entry made for the issuance of stated value stock is given below:
assigned value given to a corporation's stock for accounting purposes in lieu of par value. For example, the stated value may be set at $1 a share, so that if a company issued 10 million shares, the stated value of its stock would be $10 million. The stated value of the stock has no relation to its market price.
assigned value given to a corporation's stock for accounting purposes in lieu of par value. For example, the stated value may be set at $1 a share, so that if a company issued 10 million shares, the stated value of its stock would be $10 million. The stated value of the stock has no relation to its market price. It is, however, the amount per share that is credited to the capital stock account for each share outstanding and is therefore the legal capital of the corporation. Since state law generally prohibits a corporation from paying dividends or repurchasing shares when doing so would impair its legal capital, stated value does offer stockholders a measure of protection against loss of value.
| Dr. | Cr . | |
| Cash (or other assets) | XX | |
| Capital stock (at stated value) | XX | |
| Paid-in capital in excess of stated value | XX |
