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In this session, the concept of repurchase agreements, or repos, is introduced. A repurchase agreement involves one party selling an asset, such as inventory, for cash and then agreeing to buy it back at a higher price later. For example, if a seller sells inventory for $100 and agrees to repurchase it for $106, the transaction is not a conventional sale, but rather a borrowing arrangement. This structure is significant for revenue recognition, as it clarifies whether a company is entering into a repo agreement or engaging in a traditional sale. Understanding repos is crucial for analyzing financial transactions and their implications.