Characteristics of real estate sales and purchases with deferred payments

In relation to the characteristics of the sale and purchase of real estate with deferred payment, it must be taken into account that there are few occasions, at least nowadays, in which the seller of a property receives the totality of the sale price at the moment of its formalization; and this because unfortunately the buyer does not have sufficient liquidity to fully satisfy the price at the time of the sale.

From an accounting point of view, the standards define costs as the disbursements and charges clearly and directly associated with the production of goods or the rendering of services from which the economic entity generates its income. It is also stated that cost is the value of the resources assigned in exchange for some item or service. The resource transferred is normally money and even if it is not, it must be expressed in monetary terms.

The terms cost and expense are used interchangeably to designate the same thing, but from a conceptual point of view, the terms are different. Cost implies a capitalizable economic sacrifice comparable to the terms investment and asset; something that is stored in the company and then sold to generate income to cover the cost of obtaining it.

The expense is consumed over the period, it does not represent an asset or an investment, it is neither stored nor sold, and its effect is to decrease operating profit and therefore equity. Expenses give rise to disbursements for the company, whether there is production or not.

Costs, as an instrument of financial execution, have become an indispensable element of management for the preparation of economic information, the development of planning and control functions and decision making. An industrial company acquires raw material to which it applies a technological transformation process to convert it into a finished product.