Stated Value

What Is a Stated Value?

A stated value is an amount assigned to a corporation's stock for internal accounting purposes when the stock has no par value. Like par value — which is the face value of a stock stated in the corporate contract — stated value is nominal, ordinarily somewhere in the range of $0.01 and $1.00. The stated value has no connection to market price.

How the Stated Values Work

A company can decide to issue no par value stock, however for its own records, it must assign a stated value to fulfill the minimum requirement for legal capital in the state where it incorporates. For instance, on the off chance that the stated value of a company is $0.01 per share and the company issues 1 million shares, the stated value of its stock is $10,000. This amount is credited to the company's capital stock account and is considered the legal capital of a corporation.

Since it is generally illegal for a company to pay dividends or repurchase shares on the off chance that doing so disables the legal capital, the stated value assists with providing shareholders with some protection. Notwithstanding, in practice, with the stated value per share as low as one penny, monetary interest is modest or de minimus.

No Par Value Example

Apple Inc's. balance sheet for its fiscal year 2019 showed an authorization of 12.6 billion no par value shares and 9.2 billion shares issued and outstanding. The common stock in the shareholders' equity account was worth $45.2 billion as of the finish of the fiscal year. There is no note in Form 10-K that breaks down the account into stated value and additional paid-in capital amounts, however it tends to be assumed that practically all of the $45.2 billion addresses extra paid-in capital.

Features

• A stated value is an amount assigned to a corporation's stock for internal accounting purposes when the stock has no par value.
• For instance, in the event that the stated value is $0.01 per share and the company issues 1 million shares, the stated value of its stock is $10,000.
• A company can decide to issue no par value stock, yet for its own records, it must assign a stated value to fulfill the minimum requirement for legal capital in the state where it incorporates.
• The stated value has no connection to market price.
• Since it is generally illegal for a company to pay dividends or repurchase shares on the off chance that doing so disables the legal capital, the stated value assists with providing shareholders with some protection.