A boat manufacturer; Swann SpA, supplies its dealers on a consignment basis, which allows either Swann SpA

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A boat manufacturer; Swann SpA, supplies its dealers on a consignment basis, which allows either Swann SpA or a dealer to require a boat to be returned. Each dealer has to arrange insurance for the boats held on consignment.

When a boat is sold to a customer; the dealer pays Swann SpA the lower of:

• the delivery price of the boat as at the date it was first supplied, or

• the current delivery price less the insurance premiums paid to date of sale.

If a boat is unsold after three months, the dealer has to pay on the same terms.

Discuss, with reasons, whether boats held by the dealers on consignment should appear as inventory in the balance sheet of Swann SpA or the dealer LO12-5

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Financial Accounting And Reporting

ISBN: 9780273703648

10th Edition

Authors: Mr Barry Elliott, Jamie Elliott

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