Describe How to Account for Warranty Costs If the Warranty

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The Answer is For an extended warranty,a company defers revenue from the sale of the warranty contract and generally recognizes it as the company satisfies its performance obligation,usually on a straight-line basis over the life of the contract.Any costs necessary to satisfy the extended warranty are generally expensed as incurred.For a base warranty,a company recognizes the estimated warranty expense and a liability for future performance in the period of sale.Any costs incurred to satisfy the base warranty generally reduce the warranty liability.

Describe How to Account for Warranty Costs If the Warranty

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