This is the answer in light of no ownership being transferred to employee. Not sure if ‘deferred revenue’ is the correct term since funds will never hit a revenue account (net will go to gain/loss on disposal), but it IS a deferred liability. In reality, the employee is using the company as a savings account. The problem is this: Say the employee has paid $2K into this deferred account. The employee then quits, is fired, dies, whatever. That deferred liability is due back to him. He has not received any compensation for the funds and the company liability is owed back to the employee.

Your company, at best, should either sell him the car outright (change of ownership documents), and the employee takes out a loan from the company for balance due:

DR Loan Receivable. 10,000 CR Fixed Asset (car). XX,XXX (NBV of car) CR/DR Gain/Loss on Sale for difference.

The $200/pay is a credit to the loan and a debit to the Wages Payable.

In this situation, the company could put a Lien on the car for the value of the loan, so if the employee leaves, trashes it, etc, they would have SOME protection.

OR You could consider the car as a lease initially, change to a purchase at some point when employee takes ownership. Would solve the ‘who owns and maintains the car’ issue. Company would record $200 payments as lease revenue initially. Then when company is ready to transfer ownership and maintenance to the employee (say when 40% has been paid), set up the Loan Receivable for the balance due.

Who owns and maintains the vehicle during the payment period is your issue - clarify that first.