when a company initially issues stock the equity section of the balance sheet increases through a credit to the common stock and the additional paid in capital apic accounts the common stock account reflects the par value of the shares while the apic account shows the excess value received over the par value 
due to double entry bookkeeping the offset of this journal entry is a debit to increase cash or other asset in the amount of the consideration received by the shareholders treasury shares reduce total shareholders equity and are generally labeled as treasury stock or equity reduction there are two methods of accounting for treasury stock the cost method and the par value method the cost method is the most commonly used method by most public entities it uses the value paid by the company during the repurchase of the shares and ignores their par value the cost of the treasury stock is included within the stockholders equity portion of the balance sheet under this method it is common for stocks to have a minimal par value such as 1 but sell and be repurchased for much more 