Bruges Electronics Inc. offers one model of laptop computer for £1000 and a two-year warranty for £250. The retailer, as part of a Boxing Day promotion, offers a limited-time offer for the laptop, including delivery and the two-year warranty for £1,180. The cost of the computer to Bruges is £700. Any warranty repairs are assumed to be done ratably over time. Bruges accounts for transactions using the customer consideration model. In the first twelve months following the sale, Bruges incurred £980 of costs servicing the computers under warranty.
In the first twelve months, Bruges would record warranty expense of

Question

Quizplus · Accepted Answer

The warranty expense recorded in the first twelve months is the actual cost incurred for servicing the computers under warranty, which is £980.