NAC706.401979. Incorporated companies: Net worth.

If a company is an incorporated company, the company shall keep the following accounts as a record of its net worth:

     1. An account for common stock.

     2. An account for preferred stock, which must include for each class of capital stock actually issued the par value of the stock or, if the stock is issued without par value, the stated value of the stock if it has a stated value, or the cash value of the consideration received for the stock if it does not have a stated value, including the par or stated value of such capital stock in the account for reacquired, treasury, capital stock described in subsection 6. If the actual cash value of the consideration received is not the same as the par or stated value of any stock having a par or stated value, the difference must be credited or debited, as appropriate, to the premium or discount account for the particular class and series of stock. If capital stock is retired, the appropriate accounts must be charged with the amount at which the stock is carried. A separate ledger account with a descriptive title must be maintained for each class and series of stock. The supporting records must show the shares nominally issued, actually issued, and nominally outstanding.

     3. The account for other paid-in capital, which must include the balance of all other credits for paid-in capital not otherwise included in the capital stock accounts. The account must be kept to show the source of the credits included for each class and series of stock issued. The items in the account must indicate:

     (a) Premiums received on original issues of capital stock. Premiums received on capital stock must not be set off against expenses. A premium received on an issue of a certain class or series of stock must not be set off against the expenses from another issue of the same class or series.

     (b) Donations received from stockholders consisting of capital stock or reduction of debt of the company and the cash value of other assets received as a donation.

     (c) Reduction in the par or stated value of capital stock.

     (d) Gain on resale or cancellation of reacquired capital stock.

     (e) Miscellaneous paid-in capital.

     4. The account for installments received on capital stock, which must include in a separate subdivision for each class and series of capital stock the amount of installments received on capital stock on a partial or installment payment plan for subscribers who are not bound by legally enforceable subscription contracts. As subscriptions are paid in full and certificates issued, the account must be charged and the appropriate capital stock account must be credited with the par or stated value of such stock. Any discount or premium on an original issue must be included in the appropriate discount or premium account.

     5. The account for discount on capital stock, which must include in a separate subaccount for each class and series of capital stock all discounts on the original issuance and sale of capital stock, including additional capital stock of a particular class or series and first issues. When capital stock which has been actually issued is retired, the amount in the account that is applicable to the shares retired must be written off to the account for other paid-in capital described in subsection 3, except that the amount must be charged to the account for sundry adjustments to surplus described in subsection 8 to the extent that it exceeds the balance in the account for other paid-in capital.

     6. The account for reacquired, treasury, capital stock, which must include in a separate subdivision for each class and series of capital stock the cost of capital stock, other than stock that is held by trustees in sinking or other funds, actually issued and reacquired by the company that is not retired or cancelled. Except as otherwise provided in this subsection, if reacquired capital stock is retired or cancelled, the difference between its cost, including commission and expenses paid in connection with the reacquisition, and its par or stated value plus any premium and less any discount applicable to the shares retired, must be debited or credited, as appropriate, to the account for other paid-in capital described in subsection 3. To the extent that such a debit exceeds the balance of gains on resale or cancellation of reacquired stock included in the account for other paid-in capital, the debit must be charged to the account for sundry adjustments to surplus described in subsection 8.

     7. The account for retained earnings, which must include:

     (a) The balance of retained earnings at the beginning of the calendar year; and

     (b) The net income for the current year after federal taxes on earnings, as well as any dividends paid, as shown on the income statement of the company.

     8. The account for sundry adjustments to surplus, which must include any adjustments required because of a discount on capital stock or clearing through the account for other paid-in capital described in subsection 3. The account must be charged whenever expenses and premiums, less discounts, exceed any gains resulting from the resale or cancellation of reacquired stock included in the account for other paid-in capital.

     (Added to NAC by Transportation Serv. Auth. by R040-02, eff. 9-20-2002)