Examples of Implicit Costs and Explicit Costs Let’s assume that a company gives a promissory note for $10,000 to a seller of a unique used machine for which the fair value is unknown. The promissory note will come due in three years and it does not specify any interest. Due to the ...
Implicitcostsare less direct. These are the undocumented costs that a business experiences as the result of something happening. For example, a company might close a store for a day in order to clean it. While this closure may not cost the company money as it is recorded on a balance shee...