Buzz Lightyear's Infinity Segway's Limited is a manufacturer of economy Segway's targeted at the University professor market.As part of Lightyear's marketing strategy, Lightyear offers four- year interest free purchase plans on all Segway's.In addition, all maintenance costs, including battery charges are completely covered for the first two years.

You are an accounting major student at WDW University and have done some research on a particular Segway.The purchase price is $21,000.You estimate that maintenance costs will be $1800 each year.The salesperson confirms to you that your total payment is $575 per month and this covers the entire cost of the Segway and all maintenance costs.The cost of these Segway's to Lightyear is 12,000.

Required

Discuss the revenue recognition policy that Buzz Lightyear's Infinity Segway's Limited should consider.Please do not provide entries.Also discuss any factors you feel are relevant to revenues and expenses in the above situation.