[tonie]

Hi, I'm having problem understanding what par value and non par value is, why does it exist and when does it exist. Please help me clarify. Thanks

[morgaine300]

Oh, well... par was originally the price the company issued the stock for, but now it's more taken the meaning of being "legal capital." It depends on the local laws, but legal capital is the amount that has to remain as a minimum and cannot be paid out in dividends. When it has no par, it can have a stated value, which is used in the same manner, and for a state requiring legal capital, the stated value can be used for this purpose. Where this is not required, it might not have par or stated value. So the why's and when's have a bit to do with local laws. In reality, these days stocks have 1c par or stated value.

I don't know if you're asking as a student, or just curious of what. Since it has nothing whatsoever to do with market value, as an investor I would pay no attention to it. As a student, most textbooks still deal with par value most of the time, at values like $10. It's not particularly realistic.

[tonie]

I'm a student and not quite grasp the concept behind it as it doesn't really make much sense since I believe it's the same as stated value.

[delite]

no par value is intended to sell at whatever the marktet will pay. There sre no journal adjusting entires but straightforward sales with simple accounting rules. When issuing par value, this amount represents a value assigned to stocks and recorded as such, when selling such there are a series of adjustments to be made regarding treasruy stock, amounts over and under require reconciliation to earning and profit