Paid Up Capital
Paid-up capital is the portion of the authorized share capital that has been paid for by shareholders at the time of subscription or purchase. It is also referred to as the contributed capital and represents the amount paid in cash or other assets for the shares.
Formula:
Paid-up capital = Issued shares ร par value per share
Example:
If a company has issued 10,000 shares of $10 par value and has received full payment for 5,000 shares, the paid-up capital would be:
Paid-up capital = 5,000 shares ร $10 par value = $50,000
Key points:
- Paid-up capital is a component of the company’s shareholders’ equity.
- It is used to raise initial capital and provide a base for the company’s operations.
- The paid-up capital can be increased through new share issuance or through the receipt of additional investment.
- It is important for companies to have sufficient paid-up capital to ensure financial stability and to meet their obligations to creditors and shareholders.
FAQs
What is the meaning of paid-up capital?
Paid-up capital is the amount of money a company has received from shareholders in exchange for shares that have been issued and fully paid for. It represents the actual funds invested by shareholders.
What is paid-up capital with an example?
If a company issues 1,000 shares at โน10 each, and all shares are fully paid by shareholders, the paid-up capital is โน10,000.
How do you calculate paid-up capital?
Paid-up capital is calculated using the formula: Paid-Up Capital = Number of Shares Issued ร Face Value per Share For example, if 5,000 shares are issued at a face value of โน20 each, the paid-up capital is โน1,00,000.
What is the difference between total capital and paid-up capital?
Total capital includes all funds available to a company (such as retained earnings, reserves, and debt), while paid-up capital only includes the funds raised directly from shareholders through issued shares.
What is the difference between issued and paid-up capital?
Issued capital is the total value of shares that a company has offered to shareholders. Paid-up capital is the portion of issued capital that shareholders have paid for.
