22. Assume that a manufacturing corporation has (1) good quality control, (2) a one-year operating cycle, (3) a relatively stable pattern of annual sales, and (4) a continuing policy of guaranteeing new products against defects for three years that has resulted in material but rather stable warranty repair and replacement costs. Any liability for the warranty * a. should be reported as non-current. b. should be reported as current. c. should be reported as part current and part non-current. d. need not be disclosed.
22. Assume that a manufacturing corporation has (1) good quality control, (2) a one-year operating cycle, (3) a relatively stable pattern of annual sales, and (4) a continuing policy of guaranteeing new products against defects for three years that has resulted in material but rather stable warranty repair and replacement costs. Any liability for the warranty * a. should be reported as non-current. b. should be reported as current. c. should be reported as part current and part non-current. d. need not be disclosed.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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22. Assume that a manufacturing corporation has (1) good quality control, (2) a one-year operating cycle, (3) a relatively stable pattern of annual sales, and (4) a continuing policy of guaranteeing new products against defects for three years that has resulted in material but rather stable warranty repair and replacement costs. Any liability for the warranty *
a. should be reported as non-current.
b. should be reported as current.
c. should be reported as part current and part non-current.
d. need not be disclosed.
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