X Ltd Sold 2000 Computers in June

question 31

Essay

X Ltd sold 2000 computers in June. The terms of sale included a 12-month warranty. The warranty provides that X Ltd will meet the cost of repairs that are associated with faulty parts attributable to manufacture. Past experience indicates that 10% of computer sales lead to warranty claims at an average cost of $70 for parts and $100 for labour, per computer.
Discuss whether the warranty commitment would meet the definition and recognition criteria of a liability to the firm at 30 June.

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Definitions:

Leadership Responsibilities

The obligations and duties associated with guiding and directing a group or organization towards achieving its goals.

Primary Sex Characteristics

The physical features present at birth and directly involved in human reproduction, such as ovaries in females and testes in males.

Menarche

The occurrence of the first menstrual period in a young woman, signifying the beginning of reproductive capability.

Parental Neglect

A form of child abuse where a parent or guardian fails to provide the basic needs or appropriate care for their child.