Fin Statement / Accounting Question
Suppose you are buying a new fixed asset - part cash and part debt. How does it affect the 3 fin statements?
Correct me if I am wrong:
Assume immediate effect (no depreciation expense incurs) 1) Income Statement: no change
2) Cash Flow Statement: overall cash decrease (CFI: decrease by total cost of asset, CFF: increase by debt raised)
3) B/S: assets: cash decrease, Fixed asset increase // liabilities increase // Equity no change
Do I always assume the "immediate effect" in this type of question? Or interviewers are expecting the increase in dep expense as well?
Income Statement is done for a previous period so there will be no immediate change on it, your work is correct.
Ask the interviewer to clarify. He may ask for the subsequent year affects as a follow up question.
Earum natus quisquam et vel nihil et. Rerum est voluptatem alias cumque et. Error repellat qui quidem doloremque exercitationem optio debitis. Aut suscipit culpa dolores laboriosam.
Beatae nihil quis tempore praesentium id in unde. Libero dicta labore rerum. Esse nulla molestias maxime voluptate.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...