Quality Appliance Company.

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 1­year 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? Explain your answer.