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What is par value?

Par value is a per share amount appearing on stock certificates. It is also an amount that appears on bond certificates.

In the case of common stock the par value per share is usually a very small amount such as $0.10 or $0.01 or $0.001 and it has no connection to the market value of the share of stock. The par value is usually described as the common stock's legal capital and it is part of the corporation's paid-in (or contributed) capital.

When a share of common stock having a par value of $0.01 is issued for $25, the account Common Stock will be credited for $0.01 and an additional paid-in capital account will be credited for $24.99 (and Cash will be debited for $25.00).

If a state no longer requires a corporation's common stock to have a par value, a corporation might issue no-par stock (which may or may not have a stated value).

In the case of bonds, the par value is also the face amount or maturity value of the bonds.