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When stock is issued at a higher value than par, a premium on stock account is credited. If a stock is issued below par, a discount on stock account is debited. Under certain circumstances, a corporation may decide to return a premium as a dividend at a later date. When a stock is issued at a discount, shareholders may be liable up to the amount of the discount in the event of a liquidation. The discount on capital account is classified as a contra paid-in capital account, and is subtracted from other capital accounts when determining the total shareholders' equity.
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