Statements of Position



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A number of methods have been developed whereby an entity finances inventory of product or materials without reporting in its balance sheet the liability or the related inventory. For example, a company transfers ("sells") a product to another party and simultaneously agrees to repurchase the product at a specified price over a specified period. For transactions of that type, the accounting standards division believes guidance is necessary to determine whether the company that "sells" the product and simultaneously agrees to repurchase the product has, in substance, transferred all the risks and rewards of ownership of the product. Based on that determination, a decision can be reached on whether the transferor should account for the transaction as a sale or as a financing transaction.

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Repurchase agreements -- United States -- Accounting


Accounting | Taxation


Originally published by: American Institute of Certified Public Accountants; Copyright and permission to reprint held by: American Institute of Certified Public Accountants.

Proposed statement of position on accounting for product repurchase agreements ;Accounting for product repurchase agreements; Exposure draft (American Institute of Certified Public Accountants), 1978, Mar. 30



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