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Current Attempt in Progress Tony's Lawn Equipment sells high-quality lawn mowers and offers a 3-year warranty on all new lawn mowers sold. In 2025, Tony sold $286,400 of new specialty mowers for golf greens for which Tony's service department does not have the equipment to do the service. Tony has entered into an agreement with Mower Mavens to provide all warranty service on the special mowers sold in 2025. Tony wishes to measure the fair value of the agreement to determine the warranty liability for sales made in 2025. The controller for Tony's Lawn Equipment estimates the following expected warranty cash outflows associated with the mowers sold in 2025. Year 2026 2027 2028 Cash Flow Estimate $2,630 3,850 5,410 $3,010 4,940 5,660 $3,870 5,590 7,680 Probability Assessment 20% 60% 20% 30% 50% 20% 30% 40% 30% Click here to view factor tables. Using expected cash flow and present value techniques, determine the value of the warranty liability for the 2025 sales. Use an annual discount rate of 5%. Assume all cash flows occur at the end of the year. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to O decimal places, e.g. 458,581.) The value of the warranty liability for the 2025 sales $

Current Attempt in Progress Tony's Lawn Equipment sells high-quality lawn mowers and offers a 3-year warranty on all new lawn mowers sold. In 2025, Tony sold $286,400 of new specialty mowers for golf greens for which Tony's service department does not have the equipment to do the service. Tony has entered into an agreement with Mower Mavens to provide all warranty service on the special mowers sold in 2025. Tony wishes to measure the fair value of the agreement to determine the warranty liability for sales made in 2025. The controller for Tony's Lawn Equipment estimates the following expected warranty cash outflows associated with the mowers sold in 2025. Year 2026 2027 2028 Cash Flow Estimate $2,630 3,850 5,410 $3,010 4,940 5,660 $3,870 5,590 7,680 Probability Assessment 20% 60% 20% 30% 50% 20% 30% 40% 30% Click here to view factor tables. Using expected cash flow and present value techniques, determine the value of the warranty liability for the 2025 sales. Use an annual discount rate of 5%. Assume all cash flows occur at the end of the year. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to O decimal places, e.g. 458,581.) The value of the warranty liability for the 2025 sales $

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Current Attempt in Progress Tony's Lawn Equipment sells high-quality lawn mowers and offers a 3-year warranty on all new lawn mowers sold. In 2025, Tony sold $286,400 of new specialty mowers for golf greens for which Tony's service department does not have the equipment to do the service. Tony has entered into an agreement with Mower Mavens to provide all warranty service on the special mowers sold in 2025. Tony wishes to measure the fair value of the agreement to determine the warranty liability for sales made in 2025. The controller for Tony's Lawn Equipment estimates the following expected warranty cash outflows associated with the mowers sold in 2025. Year 2026 2027 2028 Cash Flow Estimate $2,630 3,850 5,410 $3,010 4,940 5.660 $3,870 5,590 7,680 Probability Assessment 20% 60% 20% 30% 50% 20% 30% 40% 30% Click here to view factor tables. Using expected cash flow and present value techniques, determine the value of the warranty liability for the 2025 sales. Use an annual discount rate of 5%. Assume all cash flows occur at the end of the year. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to O decimal places, e.g. 458,581.) The value of the warranty liability for the 2025 sales $
Transcribed Image Text:Current Attempt in Progress Tony's Lawn Equipment sells high-quality lawn mowers and offers a 3-year warranty on all new lawn mowers sold. In 2025, Tony sold $286,400 of new specialty mowers for golf greens for which Tony's service department does not have the equipment to do the service. Tony has entered into an agreement with Mower Mavens to provide all warranty service on the special mowers sold in 2025. Tony wishes to measure the fair value of the agreement to determine the warranty liability for sales made in 2025. The controller for Tony's Lawn Equipment estimates the following expected warranty cash outflows associated with the mowers sold in 2025. Year 2026 2027 2028 Cash Flow Estimate $2,630 3,850 5,410 $3,010 4,940 5.660 $3,870 5,590 7,680 Probability Assessment 20% 60% 20% 30% 50% 20% 30% 40% 30% Click here to view factor tables. Using expected cash flow and present value techniques, determine the value of the warranty liability for the 2025 sales. Use an annual discount rate of 5%. Assume all cash flows occur at the end of the year. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to O decimal places, e.g. 458,581.) The value of the warranty liability for the 2025 sales $
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