This additional paid in capital template demonstrates the calculation of additional amount of capital paid by investors.
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Additional Paid In Capital (APIC) is the value of share capital above its stated par value and is an accounting item under Shareholders’ Equity on the balance sheet. APIC can be created whenever a company issues new shares and can be reduced when a company repurchases its shares. APIC is also commonly referred to as Contributed Surplus.
The formula for calculating addition paid in capital is:
Additional Paid In Capital = (Issue Price − Par Value) x Number of Shares Issued
Note that the additional paid in capital is only recorded at the initial public offering (IPO) because it is only dependent on the issue price of equity, not the market value. Once a company’s shares start trading on a public exchange, their price movements don’t impact the APIC account on the balance sheet.
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