Comapny A uses LIFO inventory cost flow assumption. It expects not to have enough inventory at year end, therefore, it decides to buy Company B's excess inventory. Company B needs extra cash flow, so the deal benifits both companies. At the end of 6 months Company B will rebuy its inventory from Company A.
This is an example of a product financing arrangement. I know that Company B will report this as a liability and not a sale. however, what will Comapny A report? Is this a purchase for company A? and will Company A be able to count items as part of its inventory in order to satisfy its LIFO cost flow assumption?