When an enterprise sells a capital asset, it sometimes provides a warranty related to the performance of that asset. This may involve incurring warranty costs in periods subsequent to the period in which the asset is sold. How are such costs dealt with for income tax purposes? How does this differ from the accounting treatment of such costs?

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The Answer of When an enterprise sells a capital asset, it sometimes provides a warranty related to the performance of that asset. This may involve incurring warranty costs in periods subsequent to the period in which the asset is sold. How are such costs dealt with for income tax purposes? How does this differ from the accounting treatment of such costs?

When an Enterprise Sells a Capital Asset, It Sometimes Provides