paidin

Paidin, typically written as paid-in capital, refers to the portion of a company’s shareholders’ equity funded by investors that exceeds the par value of issued shares. It is reported in the equity section of the balance sheet as contributed capital and reflects funds provided by owners rather than profits earned by the business.

The primary components of paidin capital are common stock at par value and contributed surplus, commonly called additional paid-in capital (APIC). When a company issues shares, the cash received is allocated between the par value of the shares and the amount received above par; the latter is recorded as APIC. Paidin capital does not represent an asset or a liability and does not appear on the income statement; it remains part of equity and changes only through equity transactions such as new share issuances, treasury stock activities, or adjustments from stock-based compensation.

Paidin capital is related to, but distinct from, retained earnings (earned capital). Retained earnings reflect accumulated profits reinvested in the business, while paidin capital represents funds supplied by shareholders. The overall level of paidin capital, along with other equity components, provides insight into the extent to which owners have funded the company beyond initial share par values.

Example: issuing 1,000 shares with a par value of $1 at $5 per share increases common stock by $1 and APIC by $4 per share, for a total paidin capital increase of $4,000. Treasury stock transactions can alter the reported levels of paidin capital depending on how they are accounted for under the governing framework (IFRS or US GAAP).

Notes: terminology varies by jurisdiction, but the concept centers on funds contributed by investors above the nominal share value.