Volt Electronics Sells Equipment That Includes a Three-Year Warranty

question 39

Multiple Choice

Volt Electronics sells equipment that includes a three-year warranty.Repairs under the warranty are performed by an independent service company under a contract with Volt.Based on prior experience,warranty costs are estimated to be $25 per item sold.Volt should recognize these warranty costs:

• A)When the equipment is sold.
• B)When the repairs are performed.
• C)When payments are made to the service firm.
• D)Evenly over the life of the warranty.

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