Sch.L, What does Additional Paid in Capital Mean?

I am guessing it is money the shareholder put in to the company? Accountants ONLY please. I need to do my parents 1120-s, I am a new accountant. I have done 1120's before, but my mothers books are not all together, neat and organized. I had to create the financials from scratch, and I am trying to make sure everything looks like it matches up to last years work. This may be a plug figure for me. Please help. Thank you.

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  • Molly
    Lv 6
    1 decade ago
    Favorite Answer

    Additional paid in capital is pretty much what it means, additional paid in for capital. An example might help.

    Let's say Joe wants to buy stock in Company A and the shares have a $100 par value (their value each). He buys 500 shares, but pays 75,000. The difference between the 75,000 he paid and the value of his stock (500 X $100 = ), $50,000, is $25,000 which would be recorded as additional paid-in capital.

    If your parents created the company, chances are their contribution would get recorded as the common stock. It just depends on how the company is set up.

    If you put it in common stock or additional paid in capital, all that matters is the total between the two. If somewhere down the road you figure out the amounts need to be reclassed, it is easy to mark it "restated" on that page.

    Also, do you know that if your parents company has less than $250,000 in assets they are not required to complete Schedule L?

    Good luck and contact me if you have any questions.

    Source(s): CPA
  • 1 decade ago

    If you are doing the recovery from hell stuff then do not look at just last years but prior years too. Been doing this for a number of years and find out a lot of things in companies closets they do not know about.

    By the way, never use the word "p", an accountant uses "adjustment". Enron used the "p" word and look where they are, think llllllllll bars

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