In confirming inventory in entrepot trade, it is mainly based on the transfer of control rights. If the contract clearly states that when the goods are delivered to the first carrier, the control rights are transferred to the buyer, then it should no longer be recognized as the company's inventory at this time. From an accounting perspective, inventory confirmation needs to meet two conditions simultaneously. One is that the economic benefits related to the inventory are likely to flow into the enterprise, and the other is that the cost of the inventory can be measured reliably. In the context of entrepot trade, it is necessary to analyze in combination with the terms of the trade contract. For example, if the contract stipulates that the risks and rewards of the goods have been transferred to the buyer during transportation, even if the goods are still in transit, our company should not account for them as inventory. In practical operations, it is necessary to carefully review the trade contract, clarify the rights and obligations of both parties, as well as the transfer nodes of risks and rewards, so as to accurately judge the ownership of inventory.
In addition, logistics information can be used to assist in the confirmation. Situations such as the goods being delivered to a specific party and the other party signing for receipt can also indirectly confirm the transfer of control rights.
Professional consultant answers
Andrew HuangYears of service：7Customer Rating：5.0
Supply chain optimization expertConsult
In confirming inventory in entrepot trade, it is mainly based on the transfer of control rights. If the contract clearly states that when the goods are delivered to the first carrier, the control rights are transferred to the buyer, then it should no longer be recognized as the company's inventory at this time. From an accounting perspective, inventory confirmation needs to meet two conditions simultaneously. One is that the economic benefits related to the inventory are likely to flow into the enterprise, and the other is that the cost of the inventory can be measured reliably. In the context of entrepot trade, it is necessary to analyze in combination with the terms of the trade contract. For example, if the contract stipulates that the risks and rewards of the goods have been transferred to the buyer during transportation, even if the goods are still in transit, our company should not account for them as inventory. In practical operations, it is necessary to carefully review the trade contract, clarify the rights and obligations of both parties, as well as the transfer nodes of risks and rewards, so as to accurately judge the ownership of inventory.
In addition, logistics information can be used to assist in the confirmation. Situations such as the goods being delivered to a specific party and the other party signing for receipt can also indirectly confirm the transfer of control rights.
Jennifer WangYears of service：4Customer Rating：5.0
Market development consultantConsult
You can check the certificate of ownership of the goods. If the certificate has been transferred to the buyer, then the inventory does not belong to our company. For example, once the ocean bill of lading is handed over to the buyer, it can basically be judged that the inventory does not belong to oneself.
Robert ChenYears of service：6Customer Rating：5.0
Customer service consultantConsult
Pay attention to the trade terms. For example, when terms such as FOB and CIF are used, after the goods cross the ship's rail, the risks and control rights may be transferred, and the inventory confirmation should be adjusted accordingly at this time.
Elizabeth LiYears of service：3Customer Rating：5.0
Compliance and risk managerConsult
Maintain close communication with the freight forwarder to understand the actual status and location of the goods. If the freight forwarder informs that the goods have been transshipped as per the buyer's instructions, then it is likely that the inventory no longer belongs to our company.
Amanda YangYears of service：3Customer Rating：5.0
Cost control consultantConsult
Check the payment situation. If the buyer has made full payment and there are no other special agreements in the contract, it usually means that the control rights have been transferred, and the inventory should no longer be recognized as one's own.
James LiuYears of service：10Customer Rating：5.0
Foreign trade tax refund consultantConsult
Refer to relevant industry practices. The common practices of inventory confirmation in similar entrepot trade models in the same industry can be used as a reference.
David LiYears of service：6Customer Rating：5.0
Senior customs declaration consultantConsult
Regularly conduct inventory checks and analyze the ownership of the goods in combination with the contract. If the inventory check reveals that the status of the goods does not match the transfer of control rights as agreed in the contract, adjust the inventory confirmation in a timely manner.
Emily LiuYears of service：10Customer Rating：5.0
Settlement and payment expertConsult
Establish a complete entrepot trade account, and record in detail the information such as the transfer of goods, contract terms, and payment receipts and payments in each trade to facilitate the accurate confirmation of inventory.
Joseph ZhouYears of service：10Customer Rating：5.0
Senior foreign trade managerConsult
Consult a professional accounting firm. They have rich experience and can provide accurate inventory confirmation suggestions based on the actual business.