Question

During 2014 Carne Corporation transferred inventory to Nolan Corporation and agreed to repurchase the merchandise early in 2015. Nolan then used the inventory as collateral to borrow from Norwalk Bank, remitting the proceeds to Carne. In 2015 when Carne repurchased the inventory, Nolan used the proceeds to repay its bank loan.

On whose books should the cost of the inventory appear at the December 31, 2014balance sheet date?
a. Carne Corporation
b. Nolan Corporation
c. Norwalk Bank
d. Nolan Corporation, with Carne making appropriate note disclosure of the transaction

Answer 1

Answer:a. Carne Corporation rtdfrtfv xcvbn

Step-by-step explanation:

Nolan then used the inventory as collateral to borrow from Norwalk Bank, remitting the proceeds to Carne.

Here, goods are temporarily transferred to Nolan corporation to handle financial requirements and agreed to repurchase the merchandise early in 2015, thus the cost inventory will be recorded by Carne corporation.

This is a kind of product financing arrangement.

Hence, the cost of the inventory will appear Carne Corporation at the December 31, 2014 balance sheet date.

Thus, the correct option is a. Carne Corporation.