Which of the following best describes the accounting for assurance-type warranty costs?
A) expensed when paid
B) expensed when obligations are reasonably possible and estimable
C) expensed based on estimates in year of sale of the associated product
D) expensed when warranty claims are certain

Question

Quizplus · Accepted Answer

Assurance-type warranty costs are expensed based on estimates in the year of sale because they are considered a part of the sales transaction and the cost of fulfilling the warranty is estimated and recognized at the time of sale.

Which of the Following Best Describes the Accounting for Assurance-Type