Accounting for product warranty costs under an assurance-type warranty ________.
A) is required for income tax purposes
B) charges an expense account when the seller performs in compliance with the warranty
C) is frequently justified on the basis of expediency when warranty costs are immaterial
D) charges an expense in the year of sale of the associated product

Question

Quizplus · Accepted Answer

Under an assurance-type warranty, the estimated warranty costs are recognized as an expense in the year of sale, as they are considered a cost of selling the product.

Accounting for Product Warranty Costs Under an Assurance-Type Warranty ________