Lachgar Industries disclosed estimated product warranty payable for comparative years as follows: ( in millions) Year 2 Year 1 Current estimated product warranty payable $11,272 $10,808 Noncurrent estimated product warranty payable 6,856 6,043 Total $18,128 $16,851 Presume that Lachgar’s sales were $146,889 million in Year 2. Assume that the total paid on warranty claims during Year 2 was $11,621 million. a. The distinction between short- and long-term liabilities is important to creditors in order to accurately evaluate the near-term cash on the business relative to the quick current assets and other longer-term . b. Provide the journal entry for the Year 2 product warranty expense. c. What two conditions must be met in order for a product warranty liability to be reported in the financial statements?
Lachgar Industries disclosed estimated product warranty payable for comparative years as follows: ( in millions) Year 2 Year 1 Current estimated product warranty payable $11,272 $10,808 Noncurrent estimated product warranty payable 6,856 6,043 Total $18,128 $16,851 Presume that Lachgar’s sales were $146,889 million in Year 2. Assume that the total paid on warranty claims during Year 2 was $11,621 million. a. The distinction between short- and long-term liabilities is important to creditors in order to accurately evaluate the near-term cash on the business relative to the quick current assets and other longer-term . b. Provide the journal entry for the Year 2 product warranty expense. c. What two conditions must be met in order for a product warranty liability to be reported in the financial statements?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Accrued Product Warranty
Lachgar Industries disclosed estimated product warranty payable for comparative years as follows:
| ( in millions) | ||||
| Year 2 | Year 1 | |||
| Current estimated product warranty payable | $11,272 | $10,808 | ||
| Noncurrent estimated product warranty payable | 6,856 | 6,043 | ||
| Total | $18,128 | $16,851 |
Presume that Lachgar’s sales were $146,889 million in Year 2. Assume that the total paid on warranty claims during Year 2 was $11,621 million.
a. The distinction between short- and long-term liabilities is important to creditors in order to accurately evaluate the near-term cash on the business relative to the quick current assets and other longer-term .
b. Provide the
c. What two conditions must be met in order for a product warranty liability to be reported in the financial statements?
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