This Is Not a Loss Contingency

question 86

Essay

This is not a loss contingency. An extended warranty is priced and sold separately from the warranted product and therefore, essentially constitutes a separate sales transaction. Since the earning process for an extended warranty continues during the contract period, revenue should be recognized over the same period. Revenue from separately priced extended warranty contracts are deferred as a liability at the time of sale, and recognized over the contract period on a straight-line basis.
2. Sale of extended warranty:

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Definitions:

Critical Stakeholders

Individuals or groups with significant influence or interest in the outcome of a project, policy, or decision, and whose support is crucial for success.

Informal Meetings

Gatherings characterized by a lack of structured agenda, allowing for spontaneous discussion and interactions among participants.

Stakeholders

Individuals or groups with an interest or concern in the success or outcomes of a project, organization, or system, often because they are directly affected by its performance.