Use the following information for questions 35 and 36.
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.
-This transaction is known as a(n)
A) consignment.
B) installment sale.
C) assignment for the benefit of creditors.
D) product financing arrangement.

Question

Quizplus · Accepted Answer

This transaction is a product financing arrangement, in which an entity (Nolan Corporation) obtains financing by using inventory as collateral, and the original owner of the inventory (Carne Corporation) repurchases it after the financing has been obtained.

Use the Following Information for Questions 35 and 36