Which of the following statements is INCORRECT concerning warranties?
A) Using the expense approach, the warranty is provided with the product or service with no additional fee.
B) Where warranty costs are immaterial or when the warranty period is quite short, the warranty costs may be accounted for using the cash basis.
C) Using the revenue approach, the warranty is a separate deliverable from the related product or service.
D) The revenue approach must be used for income tax purposes.

Question

Quizplus · Accepted Answer

The revenue approach may be used for financial reporting purposes, but there are no specific requirements for income tax purposes.

Which of the Following Statements Is INCORRECT Concerning Warranties