October 30, 2016 admin

Other Capital

Liabilities and Net Worth

OTHER CAPITAL NET WORTH ACCOUNT
2802

ACCOUNT EXPLANATION
Excess over par or stated value received on issuance of Capital stock. Includes the fair market value of property or other assets received from stockholders as contributions to capital for which no Capital stock was issued.
TRANSACTIONS
  Jrnl. Dr. Cr.
  Common stock issued for cash at a premium over par CR
    Cash in Bank—General 1001
      Common Stock (par value) 2801
      Other Capital (premium) 2802
             
  Property donated to dealership corporation by stockholder G
    Marketable Securities 1040
    Parts & Service Equipment 1720
      Other Capital 2802
COMMENTS
  • This account should be used by dealerships operating as corporations.
  • Subsidiary records should support this account. Separate accounts should be maintained for amounts applicable to each class of Capital stock.
  • If assets received as a contribution to capital are recorded at fair market value, tax counsel should be obtained to determine the proper value and depreciation for income tax purposes.
  • Transactions involving the use of this account should be handled in accordance with the advice of legal and tax counsel.