What is contributed surplus | BDC.ca
logo BDC

Contributed surplus

Share

Contributed surplus is the accounting term used whenever shares are sold at a price above their stated par value the value authorized in the company’s charter and included on the stock certificate.

When a contributed surplus occurs, two entries are made on a company’s balance sheet:

  • The first entry shows how much money was raised by the sale of shares at par value
  • The second shows the amount raised above par value

Details about the sale of shares are normally found in the notes to the financial statements.

More about contributed surplus

In the example below, ABC Co. sells 20,000 shares at $50 per share for a total of $1,000,000. Each share’s par value is $10, meaning the contributed surplus for each share sold is $40:

Common stock (par value $10)

$200,000 (20,000 shares at $10)

Contributed surplus

$800,000 (20,000 shares at $40)

Shareholder’s equity

$1,000,000

Useful resources

Start or buy a business

How to account for assets and expenses in your start-up

Read article
Technology

Free and low-cost accounting software

Read article

In Busines$ Newsletter

BDC’s monthly online newsletter for and about Canadian entrepreneurs, featuring how-to articles, business tips, success stories and interactive tools.

Learn more

Share

v17.9.0.10395