If inventory is acting as a collateral against short term loan what is the impact on balance sheet and income statement if any
Please explain
Mohit dagaPro
Inventory
Share
Please briefly explain why you feel this question should be reported.
Please briefly explain why you feel this answer should be reported.
Please briefly explain why you feel this user should be reported.
There will be no B/S impact. I/S will have interest expense relative to the loan. However, firm will have to disclose in footnotes the amount of inventory pledged.
Also, firm will not be able to use that inventory for generating revenue till it: repays the loan or purchases new inventory
Of course loan will be registered on B/S liability side.
Of course loan will be registered on B/S liability side.
Thank you