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2.Kings Company gives warranties at the time of sale. Sales of P20,000.000 were made evenly

2.Kings Company gives warranties at the time of sale. Sales of P20,000.000 were made evenly

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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2.Kings Company gives warranties at the time of sale. Sales of P20,000.000 were made evenly throughout 2023. Experience indicates that 90% of the products sold require no warranty repairs; 7% would require minor repairs costing 10% of the sales price. The appropriate discount repairs/ replacement costing 85% of the sales price. The appropriate discount factor for cash flows expected to occur on June 30, 2023 is 0.935. An appropriate risk-adjustment factor to reflect the uncertainties in the cash flow estimates is an increment of 6%. The warranty provision for 2023 is?
Transcribed Image Text:2.Kings Company gives warranties at the time of sale. Sales of P20,000.000 were made evenly throughout 2023. Experience indicates that 90% of the products sold require no warranty repairs; 7% would require minor repairs costing 10% of the sales price. The appropriate discount repairs/ replacement costing 85% of the sales price. The appropriate discount factor for cash flows expected to occur on June 30, 2023 is 0.935. An appropriate risk-adjustment factor to reflect the uncertainties in the cash flow estimates is an increment of 6%. The warranty provision for 2023 is?
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