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 prepare: Memo explaining handling of warranty.

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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 13.12BYP

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 prepare: Memo explaining handling of warranty.

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Chapter 6 - Correction of Errors COLKSCCIOLU CLEO12 PROBLEM 6-2 Counterbalancing Errors 2a0 WaIVa0 ATTAN You discovered the following errors in connection with your examination of the financial statements of Jane Corporation: 1) Accrued rent expense of P10,000 was not recorded at the end of 2020. 2) Accrued interest receivable of P15,000 was not recorded at the end of 2020. 3) The company paid one-year insurance premium of P24,000 effective April 1, 2020. The entire amount was debited to expense account and no adjustment was made at the end of 2020. 4) The company leased a portion of its building for P48,000. The term of the poleaol idease is one year ending April 30, 2021. Collection of rentwas credited to rent revenue account. At the end of 2020, no entry was made to take the unearned portion of the amount collected. up The following data were extracted from the financial statements of Jane Corporation: 00 000,00E 2020 2021 Net income Working capital RE, end of the year 100,000…

Problems 18–25 assume that a foreign company using IFRS is owned by a company using U.S. GAAP. Thus, IFRS balances must be converted to U.S. GAAP to prepare consolidated financial statements. Ignore income taxes for each problem.On January 1, 2017, Xiamen Company made amendments to its defined benefit pension plan that resulted in 60,000 yuan of past service cost. The plan has 5,000 active employees with an average expected remaining working life of 15 years. There currently are no retirees under the plan.a. Determine the appropriate accounting for the past service cost for the years ending December 31, 2017, and December 31, 2018, under (1) IFRS and (2) U.S. GAAP.b. Prepare the entry(ies) that the U.S. parent would make on the December 31, 2017, and December 31, 2018, conversion worksheets to convert IFRS balances to U.S. GAAP.

Problems 18–25 assume that a foreign company using IFRS is owned by a company using U.S. GAAP. Thus, IFRS balances must be converted to U.S. GAAP to prepare consolidated financial statements. Ignore income taxes for each problem.Sapporo K.K. was sued by a competitor in late 2017, and company management concluded that there was a 55 percent probability that the company would lose the lawsuit. The best estimate of the loss on December 31, 2017, was 4,000,000 yen. In 2018, the lawsuit is concluded with Sapporo paying its competitor 5,000,000 yen on May 15, 2018.a. Determine the appropriate accounting for this lawsuit for the years ending December 31, 2017, and December 31, 2018, under (1) IFRS and (2) U.S. GAAP.b. Prepare the entry(ies) that the U.S. parent would make on the December 31, 2017, and December 31, 2018, conversion worksheets to convert IFRS balances to U.S. GAAP.

Answer 2

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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 13.12BYP

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 prepare: Memo explaining handling of warranty.

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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 13.12BYP

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 prepare: Memo explaining handling of warranty.

Expert Solution & Answer

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Check out a sample textbook solution

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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 13.12BYP

To determine