What is the economic significance of "par value" for accounting purposes?
A)The par value determines the amount of contributed surplus.
B)Par value has no economic significance for accounting purposes.
C)Par values determines the amount of cash received from investors.
D)Par value shares are not permitted under IFRS or ASPE.

Question

Quizplus · Accepted Answer

Par value is a nominal value assigned to shares of stock for legal purposes and has no economic significance for accounting purposes. It does not determine the actual market value of a share, the amount of cash received from investors, or contribute directly to the calculation of contributed surplus. Additionally, par value shares are permitted under both IFRS (International Financial Reporting Standards) and ASPE (Accounting Standards for Private Enterprises).

What Is the Economic Significance of "Par Value" for Accounting