Warranty Warranty is assurance provided to a customer by a seller. It is provided against the probable defects that might occur in a product. Warranty for a product is recognized at the time of sale being made. When warranties and guarantees are considered, contingent liability becomes accrued. Here, estimated warranty is a liability and is credited as there is an increase in liability. Warranty expense is debited as there is increase in the expense incurred. There are two types of warranty. They are as follows: 1. Manufacturer’s warranty is the assurance given to buyer from seller at the time of purchase. It is a part of product package. On the other hand, extended warranty is the assurance given beyond the manufacturer’s original warranty. 2. Extended warranty is that warranty that are sold and priced separately. These warranty are identified as separate performance obligation and thus, recorded as a separate sales transaction. To determine: whether C must follow his boss’s suggestion or not.

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Answer 1

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Definition Definition Costs that a business is responsible for paying, should a particular event potentially occur in the future. Also called a potential liability, a contingent liability is generally recorded only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly. The Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Principles (IFRS) make it mandatory for the companies to record any contingent liability taking the principles of full disclosure, materiality, and prudence into consideration.

Chapter 13, Problem 13.14BYP

(1)

To determine

Warranty

Warranty is assurance provided to a customer by a seller. It is provided against the probable defects that might occur in a product. Warranty for a product is recognized at the time of sale being made. When warranties and guarantees are considered, contingent liability becomes accrued. Here, estimated warranty is a liability and is credited as there is an increase in liability. Warranty expense is debited as there is increase in the expense incurred. There are two types of warranty. They are as follows:

1. Manufacturer’s warranty is the assurance given to buyer from seller at the time of purchase. It is a part of product package. On the other hand, extended warranty is the assurance given beyond the manufacturer’s original warranty.

2. Extended warranty is that warranty that are sold and priced separately. These warranty are identified as separate performance obligation and thus, recorded as a separate sales transaction.

To determine: whether C must follow his boss’s suggestion or not.

(2)

To determine

To explain: The ethical dilemma

3.

To determine

the parties who will be affected when suggestion is followed.

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Vignette 6.3 DEAD-END JOB Following several reports of internal control problems in an insurance company, an internal auditor interviewed several junior managers in the claims department, The remarks of an apparently bright man in his early thirties were as follows: "I came here 5 years ago believing all the hype about long-term career opportunities and the corporate mission statement about building employee loyalty. But I haven't seen any of it yet. Until recently, I worked hard because I basically like the insurance business. But I get no recognition. Our annual evaluations are a joke. My boss catches me in the hall and asks that I sign the evaluation because it has to be in that afternoon. If I get to see the evaluation at all, it's a glance through the form while he drinks from the water fountain. Apart from one time when we went on a trip together, he has never sat down with me and given me any feedback. Of course, it's not altogether his fault. He has to attend all those meetings…

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Answer 2

Question

Definition Definition Costs that a business is responsible for paying, should a particular event potentially occur in the future. Also called a potential liability, a contingent liability is generally recorded only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly. The Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Principles (IFRS) make it mandatory for the companies to record any contingent liability taking the principles of full disclosure, materiality, and prudence into consideration.

Chapter 13, Problem 13.14BYP

(1)

To determine

Warranty

Warranty is assurance provided to a customer by a seller. It is provided against the probable defects that might occur in a product. Warranty for a product is recognized at the time of sale being made. When warranties and guarantees are considered, contingent liability becomes accrued. Here, estimated warranty is a liability and is credited as there is an increase in liability. Warranty expense is debited as there is increase in the expense incurred. There are two types of warranty. They are as follows:

1. Manufacturer’s warranty is the assurance given to buyer from seller at the time of purchase. It is a part of product package. On the other hand, extended warranty is the assurance given beyond the manufacturer’s original warranty.

2. Extended warranty is that warranty that are sold and priced separately. These warranty are identified as separate performance obligation and thus, recorded as a separate sales transaction.

To determine: whether C must follow his boss’s suggestion or not.

(2)

To determine

To explain: The ethical dilemma

3.

To determine

the parties who will be affected when suggestion is followed.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 3

Question

Definition Definition Costs that a business is responsible for paying, should a particular event potentially occur in the future. Also called a potential liability, a contingent liability is generally recorded only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly. The Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Principles (IFRS) make it mandatory for the companies to record any contingent liability taking the principles of full disclosure, materiality, and prudence into consideration.

Chapter 13, Problem 13.14BYP

(1)

To determine

Warranty

Warranty is assurance provided to a customer by a seller. It is provided against the probable defects that might occur in a product. Warranty for a product is recognized at the time of sale being made. When warranties and guarantees are considered, contingent liability becomes accrued. Here, estimated warranty is a liability and is credited as there is an increase in liability. Warranty expense is debited as there is increase in the expense incurred. There are two types of warranty. They are as follows:

1. Manufacturer’s warranty is the assurance given to buyer from seller at the time of purchase. It is a part of product package. On the other hand, extended warranty is the assurance given beyond the manufacturer’s original warranty.

2. Extended warranty is that warranty that are sold and priced separately. These warranty are identified as separate performance obligation and thus, recorded as a separate sales transaction.

To determine: whether C must follow his boss’s suggestion or not.

(2)

To determine

To explain: The ethical dilemma

3.

To determine

the parties who will be affected when suggestion is followed.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Definition Definition Costs that a business is responsible for paying, should a particular event potentially occur in the future. Also called a potential liability, a contingent liability is generally recorded only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly. The Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Principles (IFRS) make it mandatory for the companies to record any contingent liability taking the principles of full disclosure, materiality, and prudence into consideration.

Chapter 13, Problem 13.14BYP

(1)

To determine