Lesson: Additional Paid-In Capital

In this lesson, Nick Palazzolo, CPA, unravels the complexities of Additional Paid-In Capital (APIC), a concept that accountants encounter under the shareholders' equity section of the balance sheet. He explains how APIC reflects the amount that investors pay over the par value of a share, highlighting its significance as a source of profit without requiring collateral. Nick breaks down the APIC formula in a straightforward manner and illustrates the concept with practical examples, clarifying how this form of equity is a mechanism for companies to track internal gains when they issue new stock. By understanding APIC, there's a better appreciation of how companies benefit financially from the increased value of their stock during initial public offerings and beyond.