How should you recognize a transaction if a customer paid $100K for machine & the costs for defects is $65K?

Question

How should you recognize a transaction if a customer paid $100K for machine & the costs for defects is $65K?

Answer 1

To me, this cost is part and parcel of getting that sale, so I'd put it as part of COGS. If you want to track it, you could have it in a separate line like so:

COGS -

Beginning inventory

Purchases

Rectification costs

less Ending inventory