Outstanding balances for service-type warranties are
A)expensed against revenues in the current period.
B)not considered separate performance obligations.
C)reported the same way as unearned revenues.
D)all of the above are true.

Question

Quizplus · Accepted Answer

Outstanding balances for service-type warranties are reported the same way as unearned revenues, which means they are recognized as a liability on the balance sheet until the service obligation is fulfilled. Therefore, they are not expensed against revenues in the current period, and they are considered separate performance obligations.

Outstanding Balances for Service-Type Warranties Are