APIC (Additional Paid-In Capital) is the amount investors pay above the par value of a company's stock when purchasing shares during an equity offering. It represents excess capital that a company raises beyond the stock’s nominal value and is recorded under shareholders’ equity on the balance sheet.
APIC is commonly seen in venture capital funding rounds, IPOs, and stock issuances, helping companies raise funds without increasing debt.
How is APIC calculated?
APIC=(Issue Price−Par Value)×Number of Shares Issued For example, if a company issues 1,000 shares at $10 per share with a $1 par value, APIC would be: (10−1)×1,000=9,000 (10−1)×1,000=9,000
Why is APIC important for startups?
APIC shows how much money a company raises beyond par value, helping startups attract investors without taking on loans or liabilities.
Where is APIC recorded on financial statements?
APIC appears in the shareholders’ equity section of the balance sheet, reflecting investor contributions beyond the base stock value.
What happens to APIC when a company repurchases stock?
If a company buys back shares, APIC may be adjusted or reduced depending on the buyback price relative to the original issue price.
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