This case is based on an actual inventory accounting dilemma for a fish processing company located in Washington State. Rex Seafood, Incorporated (Rex) and its wholly owned subsidiary, Juneau Supply Company, purchase, process, and sell fish to restaurants and other retail outlets in the state of Washington and surrounding inland states. Rex has an agreement with Condor Enterprises to transport fish purchased from Juneau Supply in Alaska to Rex's facility in Washington for processing. The central issue of the case involves appropriate accounting and reporting for intercompany sales: How should the sales of inventory from Juneau Supply to Condor and the purchases by Rex from Condor be recorded and reported? Using the FASB Accounting Standards Codification, students must determine whether Rex's arrangement with Condor is a product financing arrangement, whether the purchases and sales of inventory should be considered a single exchange transaction, and whether the events should be considered intercompany transactions. In addition, students are asked to consider recording and disclosure implications of recommended solutions. This case is suitable for use in undergraduate Intermediate and graduate Financial Accounting classes.

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