Consigned goods - conflict in notes - request to resolve

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Consigned goods - conflict in notes - request to resolve

Postby k.sankar.ra » Mon May 30, 2016 10:24 am

Page 13 - Consigned goods
"....The inventory should be recorded (obviously by the consignor) at price paid by the consignee PLUS any shipping costs incurred by consignor to make the goods available to consignEE (consignOR in the page, probably due to printing error)".

This may mean the following entry in the consignor's books upon consignment to consignee, i.e.,
1 Consignment stock account Debit
2 Stock account Cr (with the cost of the stock issued on consignment)
3 Cash / Accounts Payable Cr (with the cost of the shipping costs paid or incurred)

In Indian accounting although, we learn that for the goods sent on consignment, the following entry is passed, i.e.,
1 Consignment account Debit
2 Goods sent on consignment account Cr (with the cost of goods sent on consignment)
(sometimes, the above entry is made at some approximate price invoiced to consignee,
and then another same or reverse entry is passed to adjust the excess of cost or the excess of invoice price)

Page 17 Example at the top of the page
"Sonali...+ product B out on consignment of Rs 40K recorded @ sale price with 20% mark-up...."

"...Goods out on consignment will be recorded in the books of the consignor at cost and not the selling price...+40K(1-20%)..."

Page 13 notes and Page 17 solution to example are conflicting one another.

Can you clarify this please ?

Ra K Sankar

My Failed Attempts
I have tried to look through the following US GAAP materials on the above issue, i.e.,
a) SFAS 151 Inventory Costs
b) ARB 43 ARB Restatements and Revisions of ARBs,
the chapter 4 of which deals with inventory pricing
Both the above do not seem to discuss consignment

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