Which of the following items below is recorded as an estimate when initially recognized?
A)CPP payable
B)Unearned revenue
C)Warranty obligation
D)Notes payable

Question

Quizplus · Accepted Answer

A warranty obligation is recorded as an estimate when initially recognized because it represents the estimated cost of providing future warranty services for products sold or services rendered. The actual cost may vary from the estimated amount. The other options (A, B, D) are recorded at their contractual amounts and do not involve estimation.

Which of the Following Items Below Is Recorded as an Estimate