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Business

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Describe the accounting treatment for an assurance-type warranty and for a service-type warranty.

Personal Finance

13th Edition

ISBN:9781337669214

Author:GARMAN

Publisher:GARMAN

Chapter8: Vehicle And Other Major Purchases

Section8.2: Comparison Shop To Find The Best Buy

Problem 7CC

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Describe the accounting treatment for an assurance-type warranty and for a service-type warranty.

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What accounts are used to record a contingent warranty liability that is probable and estimable but has yet to be fulfilled? A. warranty liability and cash B. warranty expense and cash C. warranty liability and warranty expense, cash D. warranty expense and warranty liability
Describe the types of warranty.
What are warranty payments? Please explain.
19. Which of the following best describes the accounting for assurance-type warranty costs? * a. Expensed when paid. b. Expensed when warranty claims are certain. c. Expensed based on estimate in year of sale. d. Expensed when incurred.
what accounts are used to record a contingent warranty liability that is probable and estimable but has yet to be fulfilled
Which of the following is classified as nonmonetary? a. Warranty liability b. Accrued expense c. Unamortized discount on bonds payable d. Refundable deposit
Describe how the matching principle applies to contingent liabilities (hint: warranties).
Access the FASB Accounting Standards Codification at the FASB website (www.fasb.org).Required:Determine the specific citation for accounting for each of the following items:1. If it is only reasonably possible that a contingent loss will occur, the contingent loss should be disclosed.2. Criteria allowing short-term liabilities expected to be refinanced to be classified as long-term liabilities.3. Accounting for the revenue from separately priced extended warranty contracts.4. The criteria to determine if an employer must accrue a liability for vacation pay
Access the FASB Accounting Standards Codification at the FASB website ( asc.fasb.org ) Required: Determine the specific citation for accounting for each of the following items: 1. If it is only reasonably possible that a contingent loss will occur, the contingent loss should be disclosed. 2. Criteria allowing short-term liabilities expected to be refinanced to be classified as long-term liabilities. 3. Accounting for the revenue from separately priced extended warranty contracts. 4. The criteria to determine if an employer must accrue a liability for vacation pay.
2. Which of the following best describes the accounting for assurance-type warranty costs? * 1 point a. Expensed when paid. b. Expensed when warranty claims are certain. c. Expensed based on estimate in year of sale. d. Expensed when incurred.
Warranty liability is an estimate based on past warranty claims. How might a company determine how much to accrue for warranty? Why might it change the accrual?
If problem is silent as to the terms of a Warranty Payable, will it be presented in the current liabilities, or the non-current liabilities section of the balance sheet?