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FOB Shipping Point vs. FOB Destination?


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  #1  
Old 07-13-2008, 06:30 AM
export export is offline
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Default FOB Shipping Point vs. FOB Destination?

I disagree...
FOB Destination indicates that title, and therefore liability remains with the seller until the goods are delivered.

Thus...the goods in transit should be included in the inventory balance until delivered.

ADDED
Deciding that the buyer is the company that should add the goods to the balance sheet means assuming that the buyer is a merchant who keeps a balance sheet in ALL cases, which is not necessarily so. However assuming that the seller is a merchant who must keep a balance sheet would be true in all cases.

Semantically the question may be weak, but taken on face value the answerer should always assume what would be true in ALL cases.
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Old 07-13-2008, 06:30 AM
KungFu KungFu is offline
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Default FOB Shipping Point vs. FOB Destination?

I tend to agree with Phiba. But I must say that the question is badly worded. "Which of the following items should be included in a company's inventory at the balance sheet date?" Which company is the question referring to? The buyer or the seller?

Having said that, looking at option (a) Goods in transit which were purchased f.o.b. destination, I think the perspective is that of the buyer, so Phiba is right. The buyer should NOT include the goods in his balance sheet. Inappropriatus looked at it from the point of view of the seller, and of course, the seller SHOULD include the goods in its balance sheet. But if that's what the question had intended, it would have said, (a) Goods in transit which were SOLD f.o.b. destination
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Old 07-13-2008, 06:30 AM
Flory Flory is offline
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Default FOB Shipping Point vs. FOB Destination?

Q:
Which of the following items should be included in a company's inventory at the balance sheet date?
a) Goods in transit which were purchased f.o.b. destination.
b) Goods received from another company for sale on consignment.
c) Goods sold to a customer which are being held for the customer to call for at his or her convenience.
d) None of these.

I have eliminated choices b) and c) am tempted to select answer d) "None of these" but I am unsure if I am understanding the definition of both these terms.

FOB Shipping Point - Ownership of goods passes to the buyer when the public carrier accepts the goods from the seller.

FOB destination : Legal Title to the goods remains with the seller until the goods reach the buyer.

Referring back to the question, a) "Goods in transit which were purchased F.O.B. destination" would remain with the seller.

Only if a) stated that "Goods in transit ...F.O.B. Shipping point" would this be correct.

So d) is my final answer ... right?
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Old 07-18-2010, 01:44 PM
johnblack johnblack is offline
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FOB Destination indicates that the sale will occur when it arrives at the destination—at the buyer’s receiving dock. In the FOB destination scenario, the title transfers to the buyer when the goods reach the buyer’s premises; at that point the seller recognizes a sale, and the buyer recognizes a purchase.
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Old 08-04-2010, 02:51 PM
sophiadavid01 sophiadavid01 is offline
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FOB Shipping Point is retains to the shipping of goods. The term FOB is for Freight of Board. FOB Destination is a title to passes at destination and
the buyer will have the total responsibilities until the ship has been delivered.
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