Sharpness of ‘Full Stock’
Full stock is a stock with a par value of $100 per ration. A full stock issue can be either a preferred share or common part, although for practical purposes today par value of common stock is set at zero or at a assay very close to nil.
BREAKING DOWN ‘Full Stock’
Preferred hoard whose par value is $100 per share is full stock. Preferred carry shares characteristics with bonds, including the fact they are argued with a face value. The yield on a preferred share is simply premeditated as the annual dividend divided by $100. For example, an annual dividend payment of $7.50 per interest is equivalent to a 7.5% yield.
Common stock, however, is generally discharged with a zero par value or something just nominally above it for accounting purposes. $0.01 par value is normal, as is $0.001, and so on, for companies with shares outstanding. Apple Inc., for instance, set the par value of its hackneyed stock at $0.00001 per share. The purpose of negligible common stock par values is to provide any potential liability to stockholders meaningless if the stock became worthless. In the prematurely days of public companies, when share prices of full founder fell well below $100 or sank to nothing in a bankruptcy, shareholders who owned choke-full stock made claims against the companies to be made whole at $100.
Par value, if something atop zero, is part of a corporation’s legal capital; it is known as paid-in pre-eminent (or paid-up capital). The portion in excess of this nominal value is the secure’s additional paid-in capital. For example, a firm that issues a helping of $0.01 par value stock for $30 will credit the Common Review account (in Shareholder’s Equity) a penny. The additional paid-in capital account require be credited $29.99 for that single share issued.