General Motors Corporation (GM) disclosed estimated product warranty payable for comparative years as follows: (in millions) Year 2…………….Year 1 Current estimated product warranty payable……………….$3,059…………….$2,884 Noncurrent estimated product warranty payable…………….4,327………………4,147 Total…………………………………………………………$7,386……………$7,031 Presume that GM’s sales were $135,592 million in Year 2 and that the total paid on warranty claims during Year 2 was $3,000 million. a. Why are short- and long-term estimated warranty liabilities separately disclosed? 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? View Solution: General Motors Corporation GM disclosed estimated product warranty payable for
General Motors Corporation (GM) disclosed estimated product warranty payable for comparative years as follows:
(in millions)
Year 2…………….Year 1
Current estimated product warranty payable……………….$3,059…………….$2,884
Noncurrent estimated product warranty payable…………….4,327………………4,147
Total…………………………………………………………$7,386……………$7,031
Presume that GM’s sales were $135,592 million in Year 2 and that the total paid on warranty claims during Year 2 was $3,000 million.
a. Why are short- and long-term estimated warranty liabilities separately disclosed?
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?
View Solution:
General Motors Corporation GM disclosed estimated product warranty payable for
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