Summary of Statement No. 49

Accounting for Product Financing Arrangements (Issued 6/81)


This Statement specifies criteria for determining when an arrangement involving the sale of inventory is in substance a financing arrangement. A product financing arrangement is a transaction in which an enterprise sells and agrees to repurchase inventory with the repurchase price equal to the original sale price plus carrying and financing costs, or other similar transactions. This Statement requires that a product financing arrangement be accounted for as a borrowing rather than as a sale.