Paid-in-Surplus
Categories: Accounting, Company Management, Investing
Extra money, more or less.
Paid in surplus is a balance sheet term: it represents the amount that investors have paid in shares above the par value of the shares. It only refers to shares bought directly from the company—not traded on the market. Usually, companies price the par value pretty low so a lot of money earned from a public offering is from paid in surplus.
Example
A company's common shares have a par value of $1. The company prices these shares at $10 on the IPO. The paid-in surplus is the difference between the par value and the price, or $9. If the company sells one million shares, they put $9 million in the paid in surplus section on the balance sheet.