Use the following information to solve the following questions:
During 2020 Ebert Corp. transferred inventory to Siskel Corp. and agreed to repurchase the merchandise early in 2021. Siskel then used the inventory as collateral to borrow from Southern Bank, remitting the proceeds to Ebert. In 2021 when Ebert repurchased the inventory, Siskel used the proceeds to repay its bank loan.
-On whose books should the cost of the inventory appear at the December 31, 2020, statement of financial position date?
A) Siskel Corp.
B) Ebert Corp.
C) Southern Bank
D) Siskel Corp., with Ebert Corp. making appropriate note disclosure of the transaction

Question

Quizplus · Accepted Answer

Since Ebert Corp. is the original owner of the inventory and has agreed to repurchase it in 2021, the cost of the inventory should appear on Ebert Corp.'s books at the December 31, 2020, statement of financial position date. Siskel Corp. only holds the inventory temporarily as collateral and does not have ownership rights. Southern Bank is not related to the inventory transfer and loan repayment. While Siskel Corp. should also disclose the transaction in their notes, the cost of the inventory should still appear on Ebert Corp.'s books.

Use the Following Information to Solve the Following Questions