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No-par value stock is issued without a par value. The value of no-par value stocks is determined by the price investors are willing to pay on the open market. The advantage of no-par value stock is that companies can then issue stock at higher prices in future offerings.
No Par Value Stock Example: If the company decides to assign a ?stated value? to the no-par shares (let's say $1.00 per share), the accounting would be similar to par value stock. In this case (assuming a stated value of $1.00 per share): Common stock (stated value): 1,000 shares * $1/share = $1,000.
Par value, which is also called par, nominal value, or face value, is the amount at which a security is issued or can be redeemed. No-par value stock doesn't have a redeemable price, rather prices are determined by the amount that investors are willing to pay for the stocks on the open market.
The accounting entry for a no-par-value stock will be a debit to the cash account and credit to the common stock account within shareholder's equity.
Par value, which is also called par, nominal value, or face value, is the amount at which a security is issued or can be redeemed. No-par value stock doesn't have a redeemable price, rather prices are determined by the amount that investors are willing to pay for the stocks on the open market.