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Stockholders’ equity is not a claim to specific assets, but a claim against a portion of the total net assets.The par value of a stock has no relationship to its fair value.However, common stockholders generally control the management of the corporation and tend to profit most if the company is successful.In the event that a corporation has only one authorized issue of capital stock, that issue is by definition common stock, whether or not it is so designated in the charter.
The transfer of ownership between individuals in the corporate form of organization is accomplished by one individual selling or transferring shares to another individual.
More than one class of stock is sometimes issued for a single payment or lump sum amount.
Such a transaction requires allocation of the proceeds between the classes of securities involved.
When no-par stock is issued, the capital stock account is credited for an amount equal to the value of the consideration received.
If no-par stock has a stated value, it may be accounted for in the same way as true no-par stock with the entire proceeds from issuance credited to the capital stock account, or the stated value may be treated similar to par value with any excess above stated value being accounted for as additional paid-in capital.