For accounting purposes, the additional paid-in capital -- sometimes termed "capital surplus" -- equals the amount of money investors paid over a nominal "par value" to acquire shares of stock. Corporations usually report both these figures on their Balance Sheet. Added together, the par value and additional paid-in capital equal the total amount of money a corporation has received through its sale of stock. This amount is generally not available for dividends and can be useful when comparing it to a company's retained earnings, also listed on the Balance Sheet.
In order to calculate additional paid-in capital, first subtract the par value from the issue price of the stock. Once this is complete, you can multiply your answer by the number of shares issued to compute the additional paid-in capital amounts.
Determining the Value
Each stock is assigned a price, called a par value. This value determines how much your asset is worth once calculated as part of a formula. You'll need to look at your balance sheet to locate the par value of your company's stock. It's important to note that the par value generally has no connection to the market value of stock. It's an arbitrary value -- usually low (e.g., 20 cents, $1.00) -- set by the company at the time of stock issuance. Usually setting par value is a legal requirement and sometimes you'll see it referred to as the stock's "stated" value. Look on stock certificates, in the stock's issuing documents, corporate charters or annual reports to find the company stock's par value.
Determining Shares of Stock
Once you have your value set, you'll need to dig further to find the number of shares of stock that have been issued by your company, as well as the issue price of each stock. Read your company's IPO, or initial public offering, documents filed with the Securities and Exchange Commission, press releases or news articles to find this data. If you have trouble finding it, check the Shareholders' Equity section of your company's Balance Sheet. This is typically where companies report the information.
Beginning Your Calculations
Once you have all your information in place, it's time to start calculating. You'll start by subtracting the stated par value from the issue price of each stock. For instance, subtract $0.20 from $45 for one share of stock to arrive at $44.80. This is your base value. Once you have this, you can multiply the result by the number of shares the company issued to calculate the additional paid-in capital amount. For example, multiplying $44.80 by 2 million shares equals $89,600,000 in additional paid-in capital. This will give you your company's additional paid-in capital for the time period specified.
- Accounting Coach: Paid-in Capital or Contributed Capital; Harold Averkamp, CPA
- University of Georgia, Terry College of Business: How to Read Financial Statements; Asterios Kefalas
- Home - APIC
- Investor.gov. "Dividend." Accessed June 23, 2020.
- Internal Revenue Service. "Topic No. 404 Dividends." Accessed June 23, 2020.
- Office of the Comptroller of the Currency. "Comptroller’s Licensing Manual: Capital and Dividends," Page 7. Accessed June 23, 2020.
Matthew Schieltz has been a freelance web writer since August 2006, and has experience writing a variety of informational articles, how-to guides, website and e-book content for organizations such as Demand Studios. Schieltz holds a Bachelor of Arts in psychology from Wright State University in Dayton, Ohio. He plans to pursue graduate school in clinical psychology.