Under the expense approach, the warranty liability is measured using
A) the estimated future cost of servicing the product warranty.
B) actual costs of past years repairs.
C) the estimated sales of past years.
D) the estimated future returns of products.

Question

Quizplus · Accepted Answer

The expense approach to measuring warranty liability involves estimating the future costs associated with servicing the product warranty, rather than relying on past costs or sales data. This method focuses on forecasting the expenses that will be incurred due to warranty claims in the future.

Under the Expense Approach, the Warranty Liability Is Measured Using