Use the Following Information for Questions

question 67

Multiple Choice

Use the following information for questions
During 2015 Carne Corporation transferred inventory to Nolan Corporation and agreed to repurchase the merchandise early in 2016.Nolan then used the inventory as collateral to borrow from Norwalk Bank, remitting the proceeds to Carne.In 2016 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, 2015 statement of financial position date?

• A)Carne Corporation
• B)Nolan Corporation
• C)Norwalk Bank
• D)Nolan Corporation, with Carne making appropriate note disclosure of the transaction

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Definitions:

Interest Rate

The percentage of a loan or savings amount that is charged as interest to the borrower or paid to the investor, typically expressed on an annual basis.

Annual Rate

The interest rate for a period of one year, often used for comparing the yields of financial products.

Deposits

Funds placed into an account at a financial institution for safekeeping or as a pledge for future repayment.

Compounded Semiannually

The process of calculating interest on both the initial principal and the accumulated interest of previous periods on a semiannual basis.