- [Instructor] Let's see how a candidate might answer this question and I'll be right back with some feedback. - Okay well, first, I would need to know when the equipment was purchased or will be purchased. It also helps to know what type of equipment is purchased, what it will be used for and how the company will finance it. For our purposes, let's just assume it's a simple piece of equipment to explain on a balance sheet, income statement, or cashflow statement. Assuming the equipment is paid for in cash the balance sheet will see a decrease in cash and an increase in long-term assets by the same amount in the asset section. If it was financed the financing liability would increase instead of cash decreasing. By the end of the first year, there would be depreciation. The balance sheet would account for the amount to bring down the value of the equipment. The income statement will show an amount for depreciation expense and…
Download courses and learn on the go
Watch courses on your mobile device without an internet connection. Download courses using your iOS or Android LinkedIn Learning app.