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Is contributed capital a noncurrent asset or a current asset, and is it a debit or credit?

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posted Jun 29 by Reshmi S

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1 Answer

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The account Contributed Capital is part of stockholders' equity and it will have a credit balance. Contributed capital is also referred to as paid-in capital.

When a corporation issues shares of its stock for cash, the corporation's current asset Cash will increase with the debit part of the entry, and the account Contributed Capital will increase with the credit part of the entry. If the corporation then uses some of its cash to purchase equipment, its current asset Cash will decrease and its noncurrent asset Equipment will increase.

If a corporation receives equipment in exchange for newly issued shares of stock, the noncurrent asset Equipment will increase and Contributed Capital will increase.

answer Jun 30 by Naveen Kumar
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