Free goods value to be treated as Discount

Dear All

One of our client’s requirement is to have a discount condition type in Billing conditions as follows.

As per the observation the second line item is free of charge but the requirement is to show as charged and deduct the amount of free of cost goods with Discount condition type.

I am sure there could be possibilities of

1) Difficulty in reporting for free goods since the Item category is Normal.

2) Possibilities of mismatch with reconciliation accounts.

Please share your ideas, how can we meet the above requirement.

Thanks

Kalaam