Accounting 26th Edition by Carl Warren,James Reeve,Jonathan Duchac

تمرين 12

Accrued product warranty
General Motors Corporation (GM) disclosed estimated product warranty payable for comparative years as follows:

Presume that GM's sales were $135,592 million in Year 2 and that the total paid on warranty claims during Year 2 was $3,000 million.
a. Why are short- and long-term estimated warranty liabilities disclosed separately
b. Provide the journal entry for the Year 2 product warranty expense.
c. What two conditions must be met in order for a product warranty liability to be reported in the financial statements