Corporations: Paid-in Capital, Retained Earnings, Dividends, and Treasury Stock
Read this chapter, which outlines the different sources of paid-in capital and how they are presented on the balance sheet. This chapter also covers treasury stock, dividends, stock splits, and price-per-share and price-per-earnings ratios.
Paid-in capital – Donations
Occasionally, a corporation receives a gift of assets, such as a USD 500,000 building. These donated gifts increase stockholders' equity and are called donated capital. The entry to record the gift of a USD 500,000 building is a debit to Buildings and a credit to Paid-In Capital – Donations. Accountants would make this entry in the amount of the USD 500,000 fair market value of the gift when received.