A channel rebate is a payment from a manufacturer to a retailer based on retailer sales to end consumers. The widespread use of rebates by manufactures is being met with growing retailer and consumer acceptance. Channel rebates are especially significant in the consumer industries. This kind of sales force compensation method involves the agency relationship between manufactures and retailers. Manufactures often make a specified contract, which rewards retailers when retailing sales exceeds the specified level in a certain period, to minimize the agency cost effectively and align the interests of manufactures and retailers.
Since the employ stock option (ESO) transaction involves the exchange of labor inputs for a contingent equity claim on the firm, the economic intuition of ESO and channel rebates is such similar. However, the accounting treatments of channel rebates are often not recorded exactly in the period in which they are incurred. It is important to employ reasonable and correct methods for estimating the value of channel rebates. This article suggests that manufacturers should expense the channel rebates at the grant date.
In addition, adjustments for rebate expenses are necessary to recognize the different value of rebates between grant date and statement date. This article estimates channel rebates using the options model, which is a more flexible and useful method to value intangible assets, to make it possible to report on the balance sheet the appropriate assets, liabilities, and stockholders¡¦ equity at the statement date and to report on the income statement the proper net income for the period. Because the analytical solution of our model is unknown, the numerical solution can be obtained by Monte Carlo simulation to determine the value of channel rebates reasonably and correctly. Thus, the financial statements of both manufactures and retailers will provide the most useful information to various user groups.
| Identifer | oai:union.ndltd.org:NSYSU/oai:NSYSU:etd-0614105-121810 |
| Date | 14 June 2005 |
| Creators | Lin, Yi-Hsuan |
| Contributors | Henry Y Lo, Miao-Ling Chen, Jen-Jsung Huang |
| Publisher | NSYSU |
| Source Sets | NSYSU Electronic Thesis and Dissertation Archive |
| Language | English |
| Detected Language | English |
| Type | text |
| Format | application/pdf |
| Source | http://etd.lib.nsysu.edu.tw/ETD-db/ETD-search/view_etd?URN=etd-0614105-121810 |
| Rights | not_available, Copyright information available at source archive |
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