You’re going on a double date to a movie and your friend takes out a credit card to pay for all four tickets. You tell your friend you can go to an ATM to pay for your ticket and your date’s ticket, but the friend tells you not to worry, and to pay him back in the future. By opting to take payment later, he could be said to be exercising a "deferred payment option."
Deferred payments in the options arena are often a structured and complex affair that offer certain long-term advantages and often are traded in alternative markets. Roth IRAs are another type of deferred payment option vehicle. Most deferred payments for investors usually are tied to tax laws and retirement accounts or other types of vehicles which have tax deferred incentives.
On the lending side, deferred payments are exemplified in other light by college loans, which are usually not due until after one’s graduation.
This adumbration is merciful for liberal arts majors everywhere. We'll see you for that loan paper burning party when you're 40.
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Finance: What is Deferred Compensation?8 Views
Finance allah shmoop what is deferred compensation Well you don't
get it today You get it next year at some
point you know differed If you've gotten paid today it
would have binford but then it was deford's so well
yeah it's money you don't get right now Yeah so
whywould compensation be deferred Well lotsa reasons think about a
bonus that a sales person might earn through out the
year like they get two grand in bonus money payable
next year for each month that they sell over four
pounds of yellowcake uranium powder Bob here did it in
january messed around in february and march and was a
good boy in april may and june and then on
lee hit one more sales goal ahead of christmas doing
four pounds in uzbekistanian november So bob had five months
hitting his sales bonus target and we'll have owed to
him ten grand in bonus money e compensation that was
deferred and noting that all bonuses are paid in january
of the following year like it's deferred to the following
year So from the company's perspective they show deferred compensation
as a line item or a thing on their balance
Sheet is a liability And then they converted to being
an expense when they pay everything out the first month
of the next year so come january Bob will be
very happy with his healthy bonus That is you know 00:01:29.357 --> [endTime] assuming he's still around to enjoy it there No
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