IPO - how does balance sheet change?

CFA Level III
#1

Will not be relevant for exam but I was wondering - in an IPO, where does the cash from the public sale go on the balance sheet? To Assets? In that case, what increases in Liabilities or Equity to compensate for this?

I feel like this was a Level I or Level II question and I suddenly can’t answer it.

#2

any IPO’s or secondary offerings raise equity . It will be shown as shareholders equity. only debts will be shown as liability. assets = equity+liability.

These are simplifications , there are shades of grey in each class .

#3

Debit Cash, Credit Paid in Capital

#4

Debit: Cash (i.e. increase asset)

Credit: Paid in Capital (i.e. increase equity)

Nb: No affect on liabilities

This is regardless of the IPO. If there is an new equity offering, this is the transation in the trial balance.

#5

[quote=“Allstatsandy”]

Debit: Cash (i.e. increase asset)

Credit: Paid in Capital (i.e. increase equity)

Nb: No affect on liabilities

Regardless of the type of equity offering (e.g. IPO), this is the entry in the trial balance.

#6

Debit: Cash (i.e. increase asset)

Credit: Paid in Capital (i.e. increase equity)

Nb: No affect on liabilities

Regardless of the type of equity offering (e.g. IPO), this is the entry in the trial balance.