Final answer:
The buyer reports inventory on their balance sheet for items shipped f.o.b. shipping point and in transit and for items purchased with a buyback agreement. Items received on consignment or shipped f.o.b. destination are not included until a sale occurs or the goods are received, respectively.
Step-by-step explanation:
The buyer would report the inventory in its balance sheet for items shipped f.o.b. shipping point and in transit and for items purchased with a buyback agreement. However, items received on consignment are not included as part of the buyer's inventory until they are sold because the consignor retains ownership until the sale occurs. Lastly, if the items are shipped f.o.b. destination, they will not be included in the buyer's balance sheet until the goods reach their destination because the seller owns them during transit.When goods are shipped f.o.b. shipping point, the title of the goods passes to the buyer when the carrier picks them up; hence they are included in the buyer's balance sheet even if they are still in transit. The buyback agreement is a scenario where the seller agrees to repurchase the goods at a later time or under specific conditions, but this typically does not affect the initial recognition of inventory by the buyer.In conclusion, to properly report inventory, it is crucial for a buyer to understand the terms of shipment and ownership related to their purchases.