APIC adjustment for share issuances is calculated as which of the following?

APIC adjustment for share issuances is calculated as which of the following?

• A. Number of shares repurchased times (par value minus issue price)
• B. Number of shares issued times (Issue price minus par value)
• C. Number of shares repurchased times (Issue price minus par value)
• D. Number of shares issued times (Par value minus issue price)

Answer: (B)

APIC reflects the extra amount investors pay above the stock’s par value when new shares are issued. For each issued share, par value goes into common stock, and the remaining amount (issue price minus par value) goes into Additional Paid-In Capital. Therefore the total APIC adjustment is the number of shares issued multiplied by (issue price minus par value). If you issue at par, APIC is zero; if you issue above par, APIC increases by the excess per share times the number of shares. The other options involve repurchased shares (which relate to treasury stock, not new issuances) or use the reverse difference (par value minus issue price), which would give a negative or incorrect APIC.

APIC reflects the extra amount investors pay above the stock’s par value when new shares are issued. For each issued share, par value goes into common stock, and the remaining amount (issue price minus par value) goes into Additional Paid-In Capital. Therefore the total APIC adjustment is the number of shares issued multiplied by (issue price minus par value). If you issue at par, APIC is zero; if you issue above par, APIC increases by the excess per share times the number of shares. The other options involve repurchased shares (which relate to treasury stock, not new issuances) or use the reverse difference (par value minus issue price), which would give a negative or incorrect APIC.