Facebook issues new stock worth $40 million for cash.This would not affect the shareholders' equity on the balance sheet because as new shares are sold the value of existing shares will decline by the same amount.

Question

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When new shares are issued, it increases the number of outstanding shares, which dilutes the ownership percentage and the value of existing shares. As a result, shareholders' equity on the balance sheet will be affected.

Facebook Issues New Stock Worth $40 Million for Cash