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Although a typical purchase order may not be worded as a contract (in fact most contain little more than a list of the goods or services the buyer desires to purchase, along with price, payment terms, and shipping instructions), the purchase order is a specially regarded instrument regulated by the Uniform Commercial Code or other similar law which establishes a purchase order as a contract by ...
In order to correctly report the combined company post-acquisition, one needs to evaluate the assets and liabilities being acquired and their Fair Value ("FV") -- the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The acquirer hires an ...
The supplier then delivers the products or service and the customer records the delivery (in some cases this goes through a goods inspection process). An invoice is sent by the supplier which is cross-checked with the purchase order and documents specifying which goods have been received. The payment is then made and transferred to the supplier.
Organizations typically have simpler procedures in place for low value purchasing, for example the UK's Ministry of Defence has a separate internal policy for low value purchasing valued below £10,000. [2] When the receiving department is not involved, it is typically called a two-way check or two-way purchase order.
From a buyer's point of view it expresses the intention to buy and is called a purchase order. From a seller's point of view it expresses the intention to sell and is referred to as a sales order. When the purchase order of the buyer and the sales order of the seller agree, the orders become a contract between the buyer and seller.
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However, the fixed-price items can each be purchased faster, but bargaining could set the price for an entire set of items being purchased, reducing the time for bulk purchases. Also, fixed-price items can help in pre-determining the value of an inventory, such as for insurance estimates.