Question

During 2017 Carne Corporation transferred inventory to Nolan Corporation and agreed to repurchase the merchandise early in 2018. Nolan then used the inventory as collateral to borrow from Norwalk Bank, remitting the proceeds to Carne. In 2018 when Carne repurchased the inventory, Nolan used the proceeds to repay its bank loan. This transaction is known as a(n) _________.

Answer 1

During 2017 Carne Corporation transferred inventory to Nolan Corporation and agreed to repurchase the merchandise early in 2018. Nolan then used the inventory as collateral to borrow from Norwalk Bank, remitting the proceeds to Carne. In 2018 when Carne repurchased the inventory, Nolan used the proceeds to repay its bank loan. This transaction is known as Product financing arrangement.