Par Value

1. (of a Bond) The par value of a bond is the total dollar amount of the bond that will be repaid at the expiration of the bond term. Bonds are valued at par value when the stated interest rate is equal to the effective interest rate. See also face value. (of a Stock) Generally, preferred stock is issued with a par value, but common stock may be issued with or without a par value. No-par common stock may be issued as true no-par stock or no-par stock with a stated value. See also capital stock.
2. (of a Treasury Stock) Under the par value method of treasury stock accounting, treasury shares are recorded by reducing the amounts of par (or stated) value and additional paid-in capital received at the time of the original sale. Treasury stock is debited for its par (or stated) value. Additional paid-in capital is debited for the pro rata share of the original issue price attributable to the reacquired shares. Retained earnings is debited for any excess of treasury stock cost over the original issue price. Additional paid-in capital is credited for any excess of the original issue price over the treasury stock cost. Under the par value method, the sources of capital associated with the original issue are maintained. See also treasury stock and cost method (of treasury stock accounting).