Legal Definitions - purchase accounting method

The purchase accounting method is a way of accounting for a company's acquisition of another company.

When Company A buys Company B, they use the purchase accounting method to record the transaction. This involves adjusting the assets and liabilities of Company B to their fair market value at the time of the acquisition.

A purchase agreement is a legal contract between a buyer and a seller for the sale of goods or services.

When a person buys a car from a dealership, they sign a purchase agreement that outlines the terms of the sale, such as the price, payment schedule, and any warranties or guarantees.

Purchase money refers to the initial payment made on property that is secured by a mortgage.

When a person buys a house, they typically make a down payment as purchase money. This payment is used to secure the mortgage and is usually a percentage of the total purchase price of the property.