George Is Employed by the Quality Appliance Company

question 6

Essay

George is employed by the Quality Appliance Company. All the full time employees are allowed to purchase appliances at the company's cost plus 10%. The employee also is given, at no cost, a 1-year service contract on all the goods purchased from the company. George purchased a refrigerator for $500. The company's normal selling price for the refrigerator is $800. George also received a service contract, at no charge, that had a value of $150. During the year, George was required to have his refrigerator serviced once. The cost of the call would have been $75 if he had not had the service contract. Is George required to recognize any income from the purchase of the refrigerator, the receipt of the service contract, and the service call?

---

Definitions:

Hand-off-automatic Circuit

A control circuit configuration that allows an operator to select between manual, off, or automatic operation of a device or system.

Operator

An individual or entity that controls, manages, or manipulates machinery, equipment, or systems.

Pilot Device

A manual or automatic device that provides control input to a more complex system, often used to initiate, modulate, or stop functions.

Control Coil

An electromagnetic coil that is used to control the operation of a device, often found in relays, solenoids, and valves.