The Dix Company Recorded an Estimated Liability for Warranty Claims

The Dix Company recorded an estimated liability for warranty claims related to its 2016 sales of farming machinery of $5,000,000 in its 2016 balance sheet. The warranty allows customers to get free repairs for one year. By the end of 2017, the company had paid $5,040,000 of claims. It had no further liability for repairs for the 2016 sales after 2017. In the 2017 income statement, the company should recognize

A) $40,000 of related expense
B) A benefit in its income statement of $40,000 related to these warranties
C) Warranty expense in its income statement of $5,040,000
D) Neither a benefit or an expense