what is contributed capital 
contributed capital also known as paid in capital is the cash and other assets that shareholders have given a company in exchange for stock investors make capital contributions when a company issues equity shares based on a price that shareholders are willing to pay for them the total amount of contributed capital or paid in capital represents their stake or ownership in the company contributed capital is part of stockholders equity shown on the balance sheet it comprises common stock and additional paid in capital also known as contributed surplus if the company has issued preferred stocks this line item is also shown in this section of the balance sheet and is part of contributed capital investopedia xiaojie liuunderstanding contributed capitalcontributed capital is the total value of the stock that shareholders have bought directly from the issuing company it includes the money from initial public offerings ipos direct listings direct public offerings and secondary offerings including issues of preferred stock it also includes the receipt of fixed assets in exchange for stock and the reduction of a liability in exchange for stock common stock can be compared with additional paid in capital and the difference between the two values will equal the premium paid by investors over and above the par value of the company s shares common stock is recorded at a nominal amount called the par value the par value is merely an accounting value of each of the shares to be offered and is not equivalent to the market value that investors are willing to pay it s important to distinguish that capital contributions which are an injection of cash into a company can come in other forms besides the sale of equity shares for example an owner might take out a loan and use the proceeds to make a capital contribution to the company businesses can also receive capital contributions in the form of non cash assets such as buildings and equipment these scenarios are all types of capital contributions and increase owners equity however the term contributed capital is typically reserved for the amount of money received from issuing shares and not other forms of capital contributions 