Round-trip transaction

Hey everyone,
Not sure if it’s me not understanding correctly or is it the question not well formulated (Non-official qbank).

Company X sells product A to company Y. A month later, company X buys product A from company Y in an attempt to inflate revenues.

I don’t get how buying back the asset would specifically be an attempt to inflate revenues. I do get that the whole operation might inflate the revenue if the company reports the month prior to buying back the product, but specifically buying it back is not really an attempt to inflate revenue to me.

I think this not so well worded. Maybe i misunderstood something.

What you guys think?

Is Company Y a subsidiary of Company X?

Hi s2000magicien, in fact if company Y was a subsidiary that might make sense.
In the question nothing was said about company Y being a subsidiary…

In that case, they’re getting credit for one sale (to Y) that isn’t a real sale (because they bought it back). If Y were a subsidiary, they’re get credit for two sales are aren’t really sales.

Thank you @S2000magician

My pleasure.