During the first year of operations, a company granted warranties on its products. The estimated cost of the product warranty liability at the end of the year is $8,500. The product warranty expense of $8,500 should be recorded in the years of the expenditures to repair the products covered by the warranty payments.

Question

Quizplus · Accepted Answer

The product warranty expense should be recorded in the same year the products are sold, not when the expenditures occur, to match the expense with the revenue generated from the sales.

During the First Year of Operations, a Company Granted Warranties