LM is a car dealer that is supplied inventory by car manufacturer SQ.

LM is a car dealer that is supplied inventory by car manufacturer SQ. Trading between LM and SQ is subject to a contractual agreement. This agreement states the following:

• Legal title of the cars remains with SQ until they are sold by LM to a third party. 

• Upon notification of sale to a third party by LM, SQ raises an invoice at the price agreed at the original date of delivery to LM. 

• LM has the right to return any car at any time without incurring a penalty. 

• LM is responsible for insuring all of the cars on its property.

When considering how these cars should be accounted for, which THREE of the following statements are true?