The Company intends to launch an exclusive program for Mechanics, which offers participants the opportunity to acquire a new specialized tool box at a discounted rate of 30%. The tool box has a retail price of $100,000 and can be financed internally over a 10-year period, free of any interest charges. While external providers typically offer financing to customers at a 9% interest rate, the Company believes that extending a discount interest rate of 0% to participants in this program is reasonable.

Please analyze the appropriate accounting treatment for this transaction and explain the journal entry required to record the initial sale. Additionally, describe the ongoing month-to-month accounting for the transaction throughout its duration. Present your findings taking into account

- Relevant accounting guidance and analysis of the transaction

- Proposed day one accounting and go-forward accounting for the transaction (in journal entry form)

Answer rating: 100% (QA)

To analyze the appropriate accounting treatment for the transaction we need to consider the relevant accounting guidance and principles This transacti... View the full answer