USA Booking equity transactions

[Adam Wascholl]

Generally, when I record issued stock on the books, when it's given to founders, I credit stock, and debit an expense account. Usually the par value is .0001 cents, so even 1M shares only ends up being $1000 of expense booked, which isn't a big amount. However, I have a client with a 3 cent par value who issued $1.8M shares to the founders, which means I need to book $50k to make the books balance.

What should I do here?

 

[kirby]

Recording an expense when issuing stock is not a hot idea. You do NOT have an expense. Record the debit to an asset account, like "Organization Costs Asset". That is an intangible asset so then follow the accounting for intangible assets for that one. I take it that stock is being handed out in exchange for the founder's "services." If you know the value of those services then use that as the amount of your entry. If not, do what you are doing.

 

[Adam Wascholl]

Thanks! This was another way I considered doing it, and I'll take look into the best option for this example