If a company made an acquisition with debt, how does it affect the 3 statements? Etc.
Can anyone answer this question? Thanks very much!
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It's been a while since I've thought of this, but let me take a stab. I am assuming you mean how are the three statements initially affected.
IS: No initial effect
CFS: Cash inflow from financing activities (taking the debt) which is offset by a cash outflow from investing activities (spending the debt on the acquisition) no net changes in cash flow
BS: Assets would be up by the value of the acquisition. This would be balanced by an equal increase in liabilities due to the debt. No effect on equity.
I'm pretty sure that's correct.
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