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Par value of shares

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Par value is the value of a single common share as set by a corporation’s charter. It is not typically related to the actual value of the shares. In fact it is often lower. Any stock certificate issued for shares purchased shows the par value. When authorizing shares, a company can choose to assign a par value or not.

More about the par value of shares

In the example below, ABC Co. sells 20,000 shares at $50 per share, for a total of $1,000,000. The par value per share is $10. Here’s how the sale would be recorded on balance sheet:

Common stock (par value $10)

$200,000

Contributed capital/surplus

$800,000

Shareholder’s equity

$1,000,000

If the shares were issued without a par value, the sale would be recorded as follows:

Common stock (20,000 shares at $50/share)

$1,000,000

Related definitions

Find out more in our glossary

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