Additional Paid-in Capital

Sometimes, a company issues shares of common stock at a premium to the face value. Though the face value of the common stock is Rs.10, the company might issue the stock at a premium of Rs.5. So the buyer will now have to pay Rs.15 for each share of common stock instead of the earlier Rs.10.

If 10,000 shares have been issued at a price of Rs.15, with the premium being Rs.5. Rs.1,00,000 (10,000 * 10) will be the total common stock and Rs.50,000 (10,000 * 5) will be the additional paid-in capital.