iamhustler: Here is how stockholders' equity ought to be reported.
Contributed Capital Contributed capital includes the amounts that are transferred from stockholders to the company. Preferred stock (par value x number of preferred shares issued) Common stock (par value x number of common shares issued) Additional paid in capital, preferred stock ( [issue price - par value] x number of preferred shares issued ) Additional paid in capital, common stock ( [issue price - par value] x number of common shares issued ) Additional paid in capital is also called as "Paid-in capital in excess of par value".
Retained Earnings Retained earnings represent the amount of the company's past net income retained inside the company (not paid as dividend to stockholders.)
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