Which of the following best describes the accounting for base warranty costs?
A)expensed when paid
B)expensed when obligations are probable and estimable
C)expensed based on estimate in year of sale
D)expensed when warranty claims are certain

Question

Quizplus · Accepted Answer

Base warranty costs should be expensed when the obligations are probable and estimable, which typically happens in the year of sale. This is in accordance with the matching principle of accounting, where expenses are recognized in the same period as the revenues they help to generate.

Which of the Following Best Describes the Accounting for Base