When common stock has a par value:
a) the liability of the stockholders is limited to the par value
b) there will probably be additional paid-in capital in the balance sheet
c) the market value of the stock will be higher than if there is no par value
d) the paid-in capital will equal the par value of the number of shares issued
The correct answer is b) there will probably be additional paid-in capital in the balance sheet.
Par value is a value set by the corporation for state taxation purposes. States generally tax the capital of corporations, and par value is used in some cases to determine that tax. However, many corporations have ...
This solution discusses the effect of par value to common stock on the balance sheet.