Question · Repurchase, consignment and bill-and-hold arrangements

Aérolis sells a flight simulator to a flying school for EUR 500,000. The school can require Aérolis to repurchase the simulator after four years for EUR 260,000, an option that can be exercised during one month only. According to the market studies available at contract inception, the expected market value of such a simulator after four years is around EUR 300,000. The transaction is not part of a sale and leaseback. Write a memo analysing the accounting for the arrangement at contract inception.