oblem 3 3PTS etermine to whom the inventory belong to in the

oblem 3 (3PTS) etermine to whom the inventory belong to in these situations If a supplier ships goods to LG f.o.b. shipping point and the supplier delivers the goods to the common carrier, who acts as an agent for LG. (supplier / LG) a) b) Williams Art Gallery (the consignor) ships various art merchandise to Sotheby\'s Holdings (USA) (the consignee), who acts as Williams\' agent in selling the consigned goods. (Wlliams Art Gallery/Sotheby\'s Holdings) Hill Enterprises transfers (\"sells\") inventory to Chase, Inc. and simultaneously agrees to repurchase this merchandise at a specified price over a specified period of time. (Hill Enterprises /Chase, Inc.) c)

Solution

In the first case, as the goods are shipped on FOB basis at shipping point, and are delivered to the agent of the buyer, the goods will be included in the inventory of the buyer, i.e.LG as all risks and rewards have passed at the time of shipping

In the second case, the goods are transferred to the agent on a consignment basis. Ownership of goods has not passed to the agents. Therefore, goods remain the property of the original consignor. Therefore, in this case, the goods will be included in the ivnentory of Williams

Third case is a sale and buyback arrangement, indicating that the risk and rewards of the goods essentially has not passed on to the buyer, as he is obliged to sell them back to the the original seller, Hill Enterprises in this case. Therefore, these goods will remain in the inventory of Hill Enterprises. Amount received from Chase will be considered as a liability