Unearned surplus refers to the portion of a company's surplus that is not derived from its earned income. It represents the total amounts assigned to shares that exceed the stated capital. This surplus can include:
Unearned surplus is primarily used in corporate finance and accounting. It plays a crucial role in understanding a company's financial health and capital structure. Legal professionals may encounter this term when dealing with:
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Here are a couple of examples of abatement:
Here are a couple of examples of unearned surplus:
| Term | Definition | Key Differences |
|---|---|---|
| Earned Surplus | Surplus generated from a company's operations and profits. | Earned surplus comes from profits, while unearned surplus does not. |
| Paid-in Capital | Funds raised by a company through the sale of its stock. | Paid-in capital is a component of unearned surplus but is specifically related to stock sales. |
If you are involved in a situation where unearned surplus is relevant, consider the following steps:
If your situation is complex, seeking professional legal assistance may be necessary.
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| Attribute | Details |
|---|---|
| Definition | Surplus not derived from earned income |
| Components | Paid-in surplus, asset revaluation surplus, non-share contributions |
| Legal Areas | Corporate finance, accounting compliance |
Unearned surplus refers to contributions not derived from profits, while retained earnings are profits that have been reinvested in the company.