EARN-OUT Definition

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EARN-OUT refers to an additional payment in a merger or acquisition that is not part of the original acquisition cost, which is based on the acquired company's future earnings relative to a level determined by the merger agreement.

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CONTRA ACCOUNT is a. the reduction to the gross cost of an asset to arrive at the net cost; also known as a valuation allowance; e.g., accumulated depreciation is a contra account to the original cost of a fixed asset to arrive at the book value; or, b. reduction of a liability to arrive at its carrying value; e.g., bond discount, which is a reduction of bonds payable.

BUILDING SOCIETY, similar to a Savings and Loan in the U.S., is a UK savings institution that specializes in loans for house purchase. Their members own building societies.

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