Todd Sweeney is an artist who sells his work under consignment (he displays his work in local barbershops, and customers purchase his work there). Sweeney recently transferred a painting on consignment to a local barbershop.
-After Sweeney has transferred a painting to a barbershop, the painting:
A) Should be counted in Sweeney's inventory until the barbershop sells it.
B) Should be counted in the barbershop's inventory, as the barbershop now possesses it.
C) Should be counted in either Sweeney's or the barbershop's inventory, depending on which incurred the cost of preparing the painting for display.
D) We lack sufficient information to know who should carry the painting in inventory.

Question

Todd Sweeney is an artist who sells his work under consignment (he displays his work in local barbershops, and customers purchase his work there). Sweeney recently transferred a painting on consignment to a local barbershop. 
-After Sweeney has transferred a painting to a barbershop, the painting:
A) Should be counted in Sweeney's inventory until the barbershop sells it.
B) Should be counted in the barbershop's inventory, as the barbershop now possesses it.
C) Should be counted in either Sweeney's or the barbershop's inventory, depending on which incurred the cost of preparing the painting for display.
D) We lack sufficient information to know who should carry the painting in inventory.

Quizplus · Accepted Answer

Consignment arrangements normally do not qualify for revenue recognition until delivery is made to the end customer. Prior to that point, control of goods is viewed as having been retained by the consignor, not by the consignee, so the consignor retains the goods in the consignor's inventory. In this case, that means that Sweeney will retain the painting in its inventory until the painting is sold to an end customer.

Todd Sweeney Is an Artist Who Sells His Work Under