Arm's-length definitions
| Word backwards | htgnel-s'mra |
|---|---|
| Part of speech | The part of speech of the word "arm's-length" is an adjective. |
| Syllabic division | arm's-length arm's-length Syllable separation: arm's-length |
| Plural | The plural of the word arm's-length is arm's-lengths. |
| Total letters | 10 |
| Vogais (2) | a,e |
| Consonants (8) | r,m,s,l,n,g,t,h |
Understanding Arm's-Length Transactions
When two parties engage in business transactions, they often must ensure that the transaction is conducted as an arm's-length transaction. This term refers to a transaction in which the two parties involved are independent and are acting in their self-interest without any undue influence from the other party. This concept is crucial in various industries, particularly in accounting, finance, and real estate.
Characteristics of Arm's-Length Transactions
Arm's-length transactions must meet certain criteria to be considered legitimate. The parties involved must have no existing relationship that could impact the terms of the transaction. The terms of the transaction should be fair and reasonable, as if the parties were unrelated and were negotiating with an unrelated third party. Transparency and honesty are key elements in ensuring that a transaction is considered arm's-length.
Importance in Accounting and Finance
In accounting and finance, arm's-length transactions are essential for maintaining the accuracy and integrity of financial statements. Companies must ensure that all transactions, particularly those with related parties, are conducted at arm's length to prevent any conflicts of interest or potential misrepresentation of financial information. Regulatory bodies closely monitor these transactions to ensure compliance with accounting standards.
Arm's-Length in Real Estate
In real estate, arm's-length transactions are crucial in determining the fair market value of a property. When appraising a property, the appraiser must consider only arm's-length transactions as comparable sales to arrive at an accurate valuation. Any transactions that are not conducted at arm's length may not be suitable for comparison and could lead to an inaccurate appraisal of the property.
Overall, arm's-length transactions play a vital role in various industries by ensuring fair dealings between parties and maintaining the integrity of financial information. Companies and individuals must be vigilant in conducting transactions at arm's length to avoid any potential conflicts of interest or regulatory scrutiny.
Arm's-length Examples
- The two business partners agreed to keep their relationship strictly arm's-length.
- The judge ruled that the transaction was not at arm's-length and therefore invalid.
- As a professional mediator, I always maintain an arm's-length distance from the disputing parties.
- The government agency requires all procurement processes to be conducted at arm's-length to prevent corruption.
- It is important for journalists to maintain an arm's-length relationship with their sources to uphold their integrity.
- The real estate agent advised the clients to make an arm's-length offer to increase their chances of acceptance.
- In negotiations, it is essential to keep emotions in check and maintain an arm's-length perspective.
- The company's board of directors has a policy of only engaging in arm's-length transactions with related parties.
- To avoid conflicts of interest, financial advisors must always act at arm's-length when making recommendations to clients.
- The CEO insisted on an arm's-length approach to decision-making to ensure fairness and transparency in the organization.