Solution

• The entity needs to evaluate if the customer has a significant economic incentive to exercise the put option. Given the repurchase price ($900,000) is significantly higher than the expected market price ($750,000), the customer indeed has a significant economic incentive to exercise the option.
• Therefore, the entity concludes that the control of the asset is not transferred to the customer until the put option expires on 31 December 2018.
• The transaction is thus treated as a lease, where the difference between the original selling price ($1,000,000) and the repurchase price ($900,000) is recognized as lease income over the lease term.
• If the customer does not exercise the put option by the end of the term, control of the asset is then transferred to the customer, and the revenue from the sale of the asset is recognized at the repurchase price ($900,000).

It's important to note that the exact accounting treatment might vary depending on the specific terms of the contract and local regulations, and it would be a good idea to consult with an accounting professional to ensure the correct interpretation and application of the accounting standards.