Bausch Health Companies took its eye care unit, Bausch + Lomb (BLCO) public with a public stock issuance in 2022. Bausch + Lomb had been a private company since 2007, when it had been purchased by two private equity firms. Bausch + Lomb sells contact lenses, eye drops, and implantable lenses for cataract surgery. It sells more than 400 products in total. More than 260 of those products, or more than 65%, have been introduced to the market since 2017.

Questions:

1. Assume that Bausch + Lomb issues $630 million of no-par stock to investors in exchange for cash. What would be the journal entry?

2. What would be the impact on Bausch + Lombs assets, liabilities, and equity of this issuance of $630 million no-par stock in exchange for cash?

3. At this point, why might Bausch + Lomb be choosing equity funding (stock issuance) rather than debt financing?