Accounting

It is a common practice to grant rights of return to customers for damaged or faulty products under certain conditions. Many companies offer a refund, exchange, or free repairs to their customers within a specified period. The accounting treatment for sales with rights of return requires substantial considerations. Entities need to estimate return goods’ value. […]

Repurchase agreements are transactions between two parties where they exchange financial security and cash. These agreements can be arranged in different ways. The transfer of financial security means both parties should consider the transfer of control with the transaction among other important considerations. The tax and accounting treatment for both parties depends largely on that.

Vendors offer incentives and allowances to resellers in different forms. These incentives can be in the form of cash or non-cash allowances to their resellers. ASC 705-20 guides on the accounting treatment for the considerations received from the vendors. Whereas, ASC 606-10-32 guides on the accounting principles of the considerations payable to the customers. Let

Installment sales contracts are arrangements where the buyer makes a small initial payment and the remaining balance is paid in installments. The installment method of accounting is also an alternative accounting approach. It is more suitable for sales contracts where the buyers make regular installment payments. Let us discuss what are installment sales and their

Installment sales contracts are preferred when an entity can reasonably estimate that a sale has occurred but cannot determine the collectability of the total sale value. The installment sales accounting method is an alternative accounting approach that allows entities to record installment revenues over the years as and when received. Let us discuss what installment

A modification or restructuring in a troubled debt occurs if a debtor is facing financial issues or the creditor grants concession. The debtor must evaluate the financial circumstances carefully. The creditor’s concession terms should also be evaluated to determine whether the restructuring of troubled debt falls under the accounting standards of ASC 470. Let us

Accelerated share repurchase (ASR) contracts allow a company to repurchase a large number of treasury stocks quickly. A company seeks help from an investment bank that first borrows these shares from stock lenders and then purchases the same number of shares from the stock markets. Let us discuss what is an accelerated share repurchase program,

ASC 470-30 defines the accounting treatment for participating mortgage loans. These loans involve a sharing arrangement between the lender and the borrower usually. Both parties agree on the sharing proportion, interest rate, and other loan terms. Let us discuss what is a participating mortgage loan and what is the accounting guidance for it. What is

Companies issue convertible debt that may come with embedded conversion features. These debt instruments are useful for issuing entities to raise capital. Investors can enjoy additional benefits of embedded conversion features as well as convertible debt features. Let us discuss the extinguishment of debt with an embedded conversion feature and its accounting treatment. Debt with

Convertible debt comes with a conversion feature for investors to buy stocks of the issuer. The investors can enjoy the benefits of fixed-income instruments and later can subscribe to shares of the issuing company. Issuers can attract investors by attaching the stock warrants to the convertible debt as well. The feature further acts as a