Consideration Definition - AccountingTools

AccountingTools

• CPE Courses CPE Courses CPE Log In How to Take a Course State CPE Requirements
• Articles Articles Topics Index Site Archive
• Books Accounting Books College Textbooks Finance Books Operations Books Science Fiction Novels
• Podcast Accounting Best Practices Podcast Index Podcast Summary
• Dictionary
• FAQs
• About About Contact Environmental Commitment
• Home

AccountingTools

• CPE Courses/
  • CPE Courses
  • CPE Log In
  • How to Take a Course
  • State CPE Requirements
• Articles/
  • Articles
  • Topics Index
  • Site Archive
• Books/
  • Accounting Books
  • College Textbooks
  • Finance Books
  • Operations Books
  • Science Fiction Novels
• Podcast/
  • Accounting Best Practices
  • Podcast Index
  • Podcast Summary
• Dictionary/
• FAQs/
• About/
  • About
  • Contact
  • Environmental Commitment
• Home/

AccountingTools

Accounting CPE Courses & Books

Articles AccountingTools

• CPE Courses/
  • CPE Courses
  • CPE Log In
  • How to Take a Course
  • State CPE Requirements
• Articles/
  • Articles
  • Topics Index
  • Site Archive
• Books/
  • Accounting Books
  • College Textbooks
  • Finance Books
  • Operations Books
  • Science Fiction Novels
• Podcast/
  • Accounting Best Practices
  • Podcast Index
  • Podcast Summary
• Dictionary/
• FAQs/
• About/
  • About
  • Contact
  • Environmental Commitment
• Home/

What is Consideration in Accounting?

Consideration is a payment made by one party to another in exchange for the transfer of something of value. Consideration can include the payment of property, the settlement of an obligation, or forbearance. Forbearance refers to a temporary postponement of payments. Consideration must be of value to both parties entering into a transaction. If valuable consideration is not part of a contract, the contract can be declared invalid.

Consideration must be quantifiable. Thus, an offer of money in payment for services rendered is considered to be a valid form of consideration, while a promise of increased affection in exchange for a service is not quantifiable, and so is not a valid form of consideration.

Examples of Consideration

Several examples of consideration are as follows:

• Being granted shares in a business in exchange for providing unpaid services.

• Issuing title to a vehicle in exchange for legal services.

• Paying cash in exchange for a right of first refusal for real estate.

• Issuing a loan in exchange for a promise of principal repayment, plus interest.

• Issuing stock to the owners of an acquiree in exchange for gaining control over the acquiree.

Is Consideration Always Monetary?

Consideration is not always monetary. It can include non-cash items such as goods, services, rights, or promises to perform future actions. As long as something of measurable value is exchanged between the parties, it qualifies as consideration. In accounting, non-monetary consideration is typically recorded at its fair value.

• Financial statement footnotes ...
• Antidilutive definition

• CPE Courses/
  • CPE Courses
  • CPE Log In
  • How to Take a Course
  • State CPE Requirements
• Articles/
  • Articles
  • Topics Index
  • Site Archive
• Books/
  • Accounting Books
  • College Textbooks
  • Finance Books
  • Operations Books
  • Science Fiction Novels
• Podcast/
  • Accounting Best Practices
  • Podcast Index
  • Podcast Summary
• Dictionary/
• FAQs/
• About/
  • About
  • Contact
  • Environmental Commitment
• Home/

AccountingTools

Accounting Books

College Textbooks

Finance Books

Operations Books

Copyright 2025