Balance Sheet - Preferred Stock

Say that the value of the Preferred Stock is 10,000 (200 shares at $50). And that the current market value is $40 so the preferred stock should be revalued at 8,000. The result is an offsetting 2,000 increase to equity. I am trying to in my mind to understand why equity is written up other than just to offset the writedown to the preferred shares.

I don’t remember reading anywhere that you can write up equity in any case. And I do remember reading the preferred shares are carried at par value on balance sheet!!! Correct me if I am wrong.

When you issue preferred stock, it is recorded at par value under the Preferred Stock account. If there is any excess, the excess is credited to the account Paid-In Capital in Excess of Par-Preferred. You do not adjust the figure under Equity when the market price of it changes, since the amount of equity you have is dependent on how much you got when you issued the stock. How much you got from the issuance is not going to change,regardless of much 1 share of the stock is worth right now.