par

(noun)

Equal value; equality of nominal and actual value; the value expressed on the face or in the words of a certificate of value, as a bond or other commercial paper.

Related Terms

Examples of par in the following topics:

  • Bonds Issued at Par Value

    • To record a bond issued at par value, credit the "bond payable" liability account for the total face value of the bonds and debit cash for the same amount.
    • Bonds issued at par value are relatively simple to calculate and record.
    • When a bond is issued at par value it is sold for the face value amount.
    • Since the bonds are sold at par value, the amount of cash the company receives should equal the total face value of the issued bonds.
    • Explain how a company would record a bond issued a par value

  • Redeeming at Maturity

    • The carrying value of bonds at maturity will always equal their par value.
    • In other words, par value (nominal, principal, par or face amount), the amount on which the issuer pays interest, and which, most commonly, has to be repaid at the end of the term.
    • For a bond sold at discount, its carrying value will increase and equal their par value at maturity.
    • For a bond sold at premium, its carrying value will decrease and equal the par value at maturity.
    • In case of a zero coupon bond, only the amount of par value is paid when the bond is redeemed at maturity.

  • Accounting for Sale of Stock

    • If the common stock is sold above par value the journal entry is slightly different.
    • Credit additonal paid in capital (to account for the difference between par value and sell value)
    • The sale of preferred stock is similarly treated, but a separate accounts should be established to record preferred stock and any additional paid in capital for preferred stock sold at above par value.

  • Issuing Bonds

    • For example, a bond issued at par is selling for 100% of its face value.
    • Bonds can sell for less than their face value, for example a bond price of 75 means that the bond is selling for 75% of its par (face value).

  • Redeeming Before Maturity

    • Most callable bonds allow the issuer to repay the bond at par.

  • Characteristics of Bonds

    • Nominal, principal, par, or face amount—the amount on which the issuer pays interest, and which, most commonly, has to be repaid at the end of the term.
    • Most callable bonds allow the issuer to repay the bond at par.

  • Accounting for Interest Earned and Principal at Maturity

    • Nominal, principal, par, or face amount —is the amount on which the issuer pays interest, and which, most commonly, has to be repaid at the end of the term.

  • Types of Bonds

    • They are issued at a substantial discount to par value, so that the interest is effectively rolled up to maturity (and usually taxed as such).

  • Bonds Issued at a Discount

    • For the issuer, recording a bond issued at a discount can be a little more difficult than recording a bond issued at par value.