The capital invested by investors in cash shall be recorded as paid-in capital based on the amount actually received or deposited in the bank where the enterprise has an account. The excess of the amount actually received or deposited into the enterprise's bank account in excess of its share of the enterprise's registered capital shall be included in the capital reserve.
The capital invested by investors in the form of non-cash assets shall be recorded as paid-in capital based on the value confirmed by the investing parties. Intangible assets received from investors for the initial issuance of stocks shall be recorded at the book value of the intangible assets at the investor. When an enterprise receives funds invested by investors, it should debit accounts such as "bank deposits" and "fixed assets" and credit accounts such as "paid-in capital".
Extended information
Enterprises shall confirm invested capital based on the actual monetary, physical and intangible assets received in accordance with the articles of association, contracts, agreements or relevant regulations. The establishment of a company must be subject to capital verification by a Chinese certified public accountant.
(1) For monetary investments, confirmation and verification are mainly based on receipt receipts. For foreign exchange investments made by foreign investors, certificates from the foreign exchange administration authorities of the place where the profits originate should be obtained. For capital contributions based on physical assets such as buildings, machinery and equipment, materials and supplies, confirmation should be based on various relevant vouchers, and physical inventory and on-site surveys should be conducted to verify the relevant investments. Houses and buildings should have property rights certificates.
(3) For capital contributions based on intangible assets such as patent rights, proprietary technologies, trademark rights, land use rights, etc., all relevant vouchers and documents should be used as the basis for confirmation and verification. The industrial property rights and know-how invested by the foreign joint venturer must meet the prescribed conditions.
Reference: Baidu Encyclopedia--Paid-in Capital