Bailey Ltd purchased equipment to the value of $350 000 from Beam Ltd on credit, settlement of which is due on 15 February 2021. During the financial year, BeamLtd purchased inventory fromBaileyLtd for $350000.It was agreed that this would be settled by 15 February 2021, and both entities have indicated their intent to settle the amounts on a net basis. Thus, a legal right of set-off between the two companies has been documented in writing.

Required:

Explainwhether Bailey Ltd can offset the financial asset and the financialliability.