What Issues Should Be Considered When Developing an Appropriate Warranty

question 112

Essay

What issues should be considered when developing an appropriate warranty policy?

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Definitions:

Accounting Standards Update No. 2014-09

Accounting Standards Update No. 2014-09 is a comprehensive new revenue recognition standard issued by FASB, altering the way businesses recognize revenue from contracts with customers.

Revenue Recognition Methods

The principles that dictate the conditions under which revenue is recognized in the accounts, including delivery of goods/services, evidence of an arrangement, fixed or determinable price, and collectability is reasonably assured.

Revenue From Contracts

Income that a company recognizes from the fulfillment of performance obligations specified in contracts with its customers.

Net Patient Service Revenue

The total revenue derived from patient services provided by a healthcare institution, net of any allowances for discounts and adjustments.