During 2020 ABC Corporation transferred inventory to DEC Corporation and agreed to repurchase the merchandise...
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Accounting
During 2020 ABC Corporation transferred inventory to DEC Corporation and agreed to repurchase the merchandise early in 2021. DEC then used the inventory as collateral to borrow from BBB Bank, remitting the proceeds to ABC. In 2021 when ABC repurchased the inventory, DEC used the proceeds to repay its bank loan.
- This transaction is known as a(n)
a. consignment.
b. installment sale.
c. assignment for the benefit of creditors.
d. product financing arrangement.
- On whose books should the cost of the inventory appear at the December 31, 2020 balance sheet date?
a. ABC Corporation
b. DEC Corporation
c. BBB Bank
d. DEC Corporation, with ABC making appropriate note disclosure of the transaction
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