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Wednesday, October 19, 2011 3:38:26 PM
For example, assume that a company issues 1 million shares with a par value of $50 per share. When the shares are purchased by investors, however, they pay $70 per share - a premium of $20 over par value. When the capital received from this issue is recorded, $50 million ($50*1 million) will be allocated to a share capital or paid-in-capital account. The excess $20 million ($20*1 million) will be allocated to the contributed surplus account as additional paid-in-capital.
Read more: http://www.investopedia.com/terms/a/additionalpaidincapital.asp#ixzz1bG4Ua1kC
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