question archive LWL Corporation received $23,000,000 for the issuance of its stock on May 14
LWL Corporation received $23,000,000 for the issuance of its stock on May 14
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LWL Corporation received $23,000,000 for the issuance of its stock on May 14. The par value of the LWL Corporation stock was only $23,000. Was the excess amount of $22,977,000 a profit to LWL Corporation? If not, what was it?
Suppose the par value of the LWL Corporation stock had been $4 per share, $8 per share, or $14 per share. Would a change in the par value of the company’s stock affect LWL Corporation total paid-in capital? Give the reason for your answer.
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The $22,977,000 was paid-in capital in excess of par - common. It was not a profit and therefore had no effect on net income.The par value per share of stock has no effect on total paid-in capital. Total paid-in capital is the total amount that stockholders have invested in (paid into) a corporation, including the par value of stock issued plus any additional paid-in capital.
