Why is it important to keep paid-in capital separate from earned capital?

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Originally Posted by felines27

Why is it important to keep paid-in capital separate from earned capital?

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Paid in cap, reflects someone paying for stock in the company over par, remainder of which goes to paid in cap. In additon, there are sonme transactions between shareholde and company that can produce A

paid in cap represents someone paying in excess of par/book value. Transactions between shareholders and the company regarding redemptions can also provide for paid in capital results.