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:

Property

Legal rights or interests in land, buildings, or other assets, which can include ownership of the asset itself and usage rights.

Equipment

Tangible property used in operations, such as machinery, computers, and tools, that is not intended for sale.

Inventory Controls

Systems and procedures implemented by a company to manage its inventory efficiently and minimize costs.

Merchandise

Goods that are bought and sold by a business in the regular course of its operation.