"Walk me through an equity or debt $100 "bailout" of a company and how it affects the three statements?
I dont really get why nothing happens to the income statement.
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This seems like a simple cash infusion. There was no revenue/expense. Why do you think it should affect the IS?
Perhaps, a "debt bailout" would include a future increase in the interest expense
stop posting questions that are asked and answered in BIWS
There is no income. If its a debt bailout you credit liabilities for the debt and debit cash. If its an equity bailout, you credit preferred stock and debit cash. Both would show up in the cash flow statement under financing cash flow. The interest on the debt, if any, would show up on the income statement though. Plus, if the bailout was a sale of toxic assets, then you would have to report any gain on that sale in the income statement, if any.
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