expense warranty accrual method
Q: Warranty expenses result when a company sells products then estimates the units and cost per unit…
A: Estimation of future liability on the selling product is known as estimated warranty liability.…
Q: Statement 1: Assurance-type warranty refers to a warranty that the product meets agreed-upon…
A: In the given question whether the statements are correct or incorrect needs to be determined
Q: S1: PFRS 17 allows and insurer to change its accounting policies for insurance contract only if, as…
A: S1 is correct. PFRS 17 allows the insurer to change the accounting policy only if it results in…
Q: 34-Which of the following is NOT a contingent liability? a. Product warranty b. Pending law suit…
A:
Q: 15. If an entity gives a product warranty that has been issued directly by a manufacturer, dealer or…
A: Hello. Since your question has multiple parts, we will solve the first question for you. If you want…
Q: Which of the following provides the best explanation for why warranty expense should be estimated…
A: Goods that are sold in a year can presented for warranty repair in upcoming years. But this warranty…
Q: Which one of the following options is correct for a journal entry creating provision for warranty…
A: SOLUTION- THE COMPANY NEEDS TO MAKE PROVISION OF WARRANTY WHEN IT SELLS THE PRODUCT WITH THE…
Q: 1: PFRS 17 allows and insurer to change its accounting policies for insurance contract only if, as a…
A: Only the S1 is correct PFRS 17 said that insurer can change its accounting policy if it provides…
Q: The expense for warranty costs is recorded in the period ________. A. when cash is paid to repair…
A: The warranty costs is recorded during the sale of the product. During the time of sale of a product…
Q: The adjustment will increase the warranty expense, if the actual cost of warranty exceeds the…
A: Answer: Warranty is the promise that is made by business on any product that is being sold.
Q: Statement 1: The expected profit from a sales type warranty that covers several years should all be…
A: In order to report the liabilities in the financial statements of a company the cause of litigation…
Q: 9. Which of the following best describes the accounting for assurance-type warranty costs? * a.…
A: Warranty means where the company is undertaking to make good the loss which has been incurred due to…
Q: vable is reasonably assured, what is the net income to be recognized by the entity for the year…
A: Franchise Account The Purpose of providing the franchise business to allow to use the reputation of…
Q: Access the FASB Accounting Standards Codification at the FASB website…
A: Accrued Liabilities: Accrued liabilities are those expenses that are incurred but not yet paid.…
Q: Distinguish between the accounting treatment of a manufacturer’s warranty and an extended warranty.…
A: WarrantyWarranty is assurance provided to a customer by a seller. It is provided against the…
Q: S1: PFRS 17 allows and insurer to change its accounting policies for insurance contract only if, as…
A: The current set of questions is related to accounting practices for an insurance company in terms of…
Q: 6. Note receivable discounted without recourse shall be a. excluded from the total receivables…
A: Note means an instrument acknowledging as debt due from one party to another party. It carry defined…
Q: 18. Accounting for product warranty costs under an assurance-type warranty * a. is required for…
A: It is the provision created by the company for the repair of defective goods that is return by the…
Q: Statement 1 : In accordance with IFRS 15, in accounting for customer premiums, the transaction price…
A: IFRS 15 is an accounting standard for recognition of revenue from contracts with customers. The…
Q: Determine if this shall result in recognition of liabilities 16.Sale of goods with product warranty…
A: Product warranty means a condition to repair or replace the sold goods for damages within certain…
Q: Statement I. If the pattern of the repairs cannot be established and the obligation for warranty…
A:
Q: The account "Warranty Liability": Multiple Choice a)has a year-end credit balance equal to the…
A: A warranty liability is a liability account in which a company notes the amount of the repair or…
Q: n0-14 Defining common receivables terms Lea Match the terms with their correct dcinition.…
A: Since there are multi sun-parts, we will solve first three for you. To get the remaining sun-parts…
Q: Which of the following statements is not true regarding the treatment of warranties under the new…
A: ASC 606 provides guidance for accounting for revenue from customers. Warranty is provided as a…
Q: 1. Sales journal must contain the following: * A) Date, Name and Address of Buyer, Sales Invoice or…
A: Sales journal also known as sales day book records credit sales. Cash sales are recorded in the cash…
Q: 1. PFRS 17 allows and insurer to charge its accounting policies for insurance contract only if, as a…
A: Note: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question…
Q: 18 - The entity made a discount due to the premature payment of the receivable arising from the sale…
A: When the entity made a discount for the earlier payment of the sales made on a credit basis, then…
Q: 4. Analyze the estimated warranty liability account to ascertain whether actual warranty costs…
A: Warranty refers to the guarantee in which the manufacturer of the goods promises to replace the good…
Q: 15.Which of the following is/are considered as trade receivables? I. Claims from customers for…
A: Trade receivables seem to be the sums due to a company by its clients after the sale of products and…
Q: 8. Which of the following is a current liability? a. Deferred tax liability b. An obligation for…
A: 8. According to IAS 1, the liabilities are to be classified as current if any one of four specified…
Q: Statement 1: Under an assurance-type warranty, companies charge warranty costs only to the period in…
A: Answer: Option b : Only Statement 2 is Correct Explanation: Statement 1: Under an assurance-type…
Q: All of the following statements related to recording warranty expense are true except: Top of Form…
A: As per the accrual basis warranty expenses should be recognized in the same period, in which revenue…
Q: 4. Which of the following statements about promissory notes is incorrect? a. Interest is the revenue…
A: A promissory note is a financial instrument that contains a written promise by one party to pay…
Q: endorsee/purchaser in case the debtor fails to pay. b. The obligation of the endorsee/purchaser of…
A: Recourse in simple terms refers to that condition in sell wherein the seller bears the sole…
Q: Amount for warranty liabilities is estimated on the basis of: None of these Market valuation Market…
A: Accounting is essential to operating a company since it allows businesses to track income and…
Q: All of the following statements related to recording warranty expense are true except: Multiple…
A: As per the accrual basis warranty expenses should be recognized in the same period, in which revenue…
Q: 53. Which type of warranty is/are accounted for as a separate performance obligation: 1- A normal…
A: As per IFRS 15, Revenue Recognition standard If customer has option to purchase warranty separately…
Q: The expense for warranty costs is recorded in the period ________
A: The Answer
15. The expense warranty accrual method
a. violates the matching concept
b. requires recognition in the period of sale of the estimated warranty expense and warranty
liability
c. separates accounting for two components of the sales price: the price of the product and
the price of the warranty
d. debits warranty costs to expense in the period when warranty expenditures are made
Step by step
Solved in 3 steps
- Which of the following is an account used in applying the Sales Warranty Approach, but not the Expense Warranty Approach? Select one: O a Estimated liability under warranties Ob. Warranty Expense Oc Unearned Warranty Revenue O d. Prepaid Warranty Expense19. 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.All of the following statements related to recording warranty expense are true except: Multiple Choice Warranty expense should be recorded in the period when the warranty service is performed. Warranty costs are probable and the amount can be estimated. The seller reports a warranty obligation as a liability. Estimated warranty expense is recorded when revenue from the sale of the product or service is reported. Recording estimated warranty expense requires a debit to Warranty Expense.
- Statement I. If the pattern of the repairs cannot be established and the obligation for warranty cannot be reasonably estimated, warranty costs are recorded as expense when repairs are actually made, thus there is no accrual of liability.Statement II. The transaction price for the sale of the product with warranty is allocated between the stand-alone selling prices of the product and warranty. A. Both statements are true. B. Both statements are false. C. Statement I is true; Statement II is false. D. Statement I is false; Statement II is true.6- All of the following statements related to recording warranty expense are true except: Top of Form Multiple Choice Warranty expense should be recorded in the period when the warranty service is performed. Warranty costs are probable and the amount can be estimated. Estimated warranty expense is recorded when revenue from the sale of the product or service is reported. The seller reports a warranty obligation as a liability. 0r Recording estimated warranty expense requires a debit to Warranty Expense.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
- What accounts are used to record a contingent warranty liability that is probable and estimable buthas yet to be fulfilled?A. warranty liability and cashB. warranty expense and cashC. warranty liability and warranty expense, cashD. warranty expense and warranty liability7. TRUE or FALSE. In discounting of customer’s note under conditional sale, an account “Note Receivable-Discounted” is credited. This account is a liability which will be presented under the current portion.18. Accounting for product warranty costs under an assurance-type warranty * a. is required for income tax purposes. b. is frequently justified on the basis of expediency when warranty costs are immaterial. c. charges an expense account when the seller performs in compliance with the warranty. d. represents accepted practice and should be used whenever the warranty is an integral and inseparable part of the sale.
- Which one of the following options is correct for a journal entry creating provision for warranty expenses?Select one:a. Correct option is not listed in hereb. Warranty provision Dr , Warranty expenses Crc. Warranty expenses Dr , Warranty provision Crd. Warranty Expenses Dr, PAYG tax Cr, Warranty Provision CrStatement 1: Under IFRS 15, if the warranty is base on agreed-upon specifications, warranty expense is recognize in the period in which the expenditure is done.Statement 2: Under IFRS 15, if warranties provide service other than agreed-upon specifications ( the customer has the option to buy the warranty separately), the warranty is accounted for as a distinct service and is considered a separate performance obligation. Both statements are correct. None of the statements is correct. Only statement 1 is correct. Only statement 2 is correct.Statement 1: Under an assurance-type warranty, companies charge warranty costs only to the period in which they comply with the warranty. Statement 2: For purposes of recognizing a provision, “probable” is defined as more likely than not. a. Only statement 1 is correct b. Only statement 2 is correct c. Both statements are correct d. Both statements are incorrect.
