00:01
In this video, we're going to answer whether a statement is true or false.
00:06
So let me read when stock is issued for more than its par value.
00:12
The excess is considered to be an expense and should be reported on the income statement.
00:17
So the correct answer, let me tell you in advance, it is false.
00:25
So it says that or the statement says that the excess of the excess of power value is considered to be an expense that is false.
00:44
So when stock is issued for more than its par value, it is actually called as issuing stock at a premium.
00:54
Okay, that's a premium.
00:55
So when stock is issued at a premium, the excess amount is considered to be a reserve and is reported on the balance sheet as additional paid in capital or securities premium.
01:08
So say for example, this is the par value.
01:14
You have a par value of $10 and you have an issue price of, let's say, $15...