Authorised, issued, outstanding; no par value; shares for cash and for assets

Three counts

Northlake Nordic Centre Inc.’s articles of incorporation authorise an unlimited number of common shares and 5,000 preferred shares — the ceiling the company may issue, and a number that produces no entry. It has issued 6,000 common shares to the family for 300,000 since incorporation, and all 6,000 are outstanding — held by shareholders. Under ASPE a private company cannot hold its own shares as treasury stock (a repurchased share is cancelled), so issued and outstanding are normally the same count; the paper still expects all three words.

No par value

Under the Canada Business Corporations Act (s.24) — and the provincial statutes that mirror it — shares have no par value. A share is worth what it sells for, and the whole amount received goes to the share account (s.26). There is no “par”, so there is no “Paid-in Capital in Excess of Par”, no “premium on shares”, no “discount on shares”. Every H1 and OpenStax entry that splits a share issue between a par account and an excess account is a US entry and is wrong here. Northlake issues 2,000 common shares at $50:

Cash                                    100,000
    Common Shares                                100,000

One credit, the full proceeds. Common Shares now carries 400,000 for 8,000 shares.

Shares for an asset

A neighbour sells Northlake a parcel of trail land and takes 500 common shares in payment. Her cost was 12,000; an independent appraisal values the land at 30,000. A non-cash issue is recorded at fair value — of the asset received or of the shares given, whichever is more reliably measurable (CBCA s.25 requires the property to be worth at least the cash the shares would have fetched). For a private company whose shares do not trade, the appraised land is the reliable figure:

Land                                     30,000
    Common Shares                                 30,000

The seller’s 12,000 is irrelevant — Northlake’s cost is what it gave up, and it gave up shares worth 30,000 of land. Common Shares now stands at 430,000 for 8,500 shares, an average issue price of 50.59.

Preferred shares

Northlake also issues 1,000 preferred shares at $80, carrying a $4 annual dividend that must be paid before any dividend on common shares:

Cash                                     80,000
    Preferred Shares                              80,000

A separate account, because the class has different rights: a fixed dividend first (and, if cumulative, any missed years first too — L12.6), priority on liquidation, and usually no vote. A private company can issue them; a family firm often does, to bring in an investor without giving up control.

The equity section

Shareholders’ equity is two bands: share capital (preferred, then common, each with the number of shares issued) and retained earnings. ASPE lets a private company show the movement in share capital in a note rather than in a statement of changes in equity, which is why the SRE plus a share-capital note is the usual shape. What is not here: no par or stated value, no contributed surplus from a premium, no treasury shares, no accumulated other comprehensive income.