If Apple buys $100 worth of factories using debt, how does the Balance Sheet reflect this transaction?

When Apple buys $100 worth of factories using debt, the transaction has a direct impact on the Balance Sheet. In this scenario, the company is acquiring an asset, which is the factory. As a result, the assets on the Balance Sheet increase by $100 because the factories are considered a long-term asset.

Simultaneously, since the purchase was financed through debt, it means the company now has a liability, which also increases by $100. This liability represents the obligation to repay the debt incurred to purchase the factory.

The fundamental accounting equation, which states that Assets = Liabilities + Equity, remains balanced through this transaction. By increasing both assets and liabilities by the same amount, the equation is upheld, and no changes occur to equity as a result of this specific transaction. Therefore, reflecting the increase in both assets and liabilities accurately captures the financial implications of the purchase.