What is meant by Cost of Capital? Cost of Capital can be defined as the company’s calculation of the minimum amount of return that is required that would be necessary in order for a process to be considered acceptable. The concept of cost of capital is mostly used when undertaking, or further justifying a capital […]
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Definition of WACC Weighted Average Cost of Capital is defined as the company’s cost of capital that is calculated using debt and equity. It can be defined as the minimum required rate of return for the company before the organization makes any new investment. It encapsulates the average cost of capital that the company obtains
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Definition of Deferred Consideration Deferred Consideration can be defined as a part of the purchase price that is payable by the buyer in the future, once the deal has been closed. The purchase price is mostly negotiated on the basis of the fair market value, and the mutual understanding between the purchaser, as well as
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Tenant Improvements can be described as the renovations or customizations that are made to a said property in order to benefit the tenant. However, the said alterations are only meant to be applicable to improvements in the rented space, like the office. They do not include building improvements that are made outside of the given
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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.
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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.
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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
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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
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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
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A share repurchase is a method where a company buys back its shares from its existing shareholders. Companies repurchase their shares to control the number of outstanding shares and hence key financial performance metrics. A company can use one of the top 4 methods of share repurchase arrangements discussed in detail below. Share Repurchase Arrangement
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