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.
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