complaints about the air near the pool being hot, humid, and foul smelling. Keller decided to sue. Analysis 1 When you look at warranties it is a contractual assurance that goods will meet certain standards (Beatty 2013). As the text state, an express warranty is one that the seller creates with his words and actions (Beatty 2013). There was a breach and an express warranty was made. Keller had a problem that the 7 ½ ton dehumidifier was too small. Inland sent the president and a representative
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AC540 Week 3 Assignment Please complete the below problems and submit your answers in the Week 3 Dropbox. See "Syllabus/Due Dates for Assignments & Exams" for due date information. 1. In the Course Home tab of your course shell, click on “FASB Codification Access.” Scroll to the bottom of the page and click on “For tutorials please click on the link here.” Watch and listen to the four tutorial modules and answer the following questions with information you learned in the tutorial
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actual substance of sales transactions involving equipment and extended warranties. Circuit City matches up almost perfectly with the five criteria in Exhibit 2. They incur the selling costs, they have a service network in place and warranty expenses are forecasted with a great deal of accuracy. Very few customers go above the allocated cost of the service warranty, thus Circuit City does not employ a deductible. After a warranty is purchased, Circuit City’s cost and profit can be expensed with a
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surprise was his boss’s request to reconsider one of the estimated expenses. S&G Fasteners was a new company, specializing in plastic industrial fasteners. All products carry a generous long-term warranty against manufacturer’s defects. “Don’t you think 4% of sales is a little high for our warranty expense estimate?” his boss wondered. “After all, we’re new at this. We have little experience with product introductions. I just got off the phone with Blanchard (the company president). He thinks
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You are an automobile dealer and your manufacturer has just announced a new vehicle that they believe will be a hit in terms of both style and price since it has European features and is very competitively priced. The only apparent twist is the warranty on the vehicle is 50,000 miles rather than 100,000 which is standard for the manufacturer. You have learned that the reason for this is in an effort to get this vehicle to market quickly they used an existing transmission instead of developing one
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Date: July 25, 2014 | | Re: Accounting for Warranties Sold Separately | | | | Dear Ms. Duquesne, Thank you for reaching out to me about the accounting standards involved in the type of warranty that you hope to sell along with your newest line of products. First, I would like to provide a little background on accounting for warranties and then I will discuss the treatment of warranties, hopefully answering all of your questions. A warranty puts two obligations on the issuer; preparedness
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the sale of 500 Rollomatics at $6,000 each) Warranty Expense 20,000 Cash 20,000 Warranty Expense 100,000 Estimated Liability Under Warranties 100,000 ($120,000 - $20,000 = $100,000) b. Cash 3,000,000 Sales 2,850,000 Unearned Warranty Revenue 150,000 Warranty Expense 20,000 Cash 20,000 Unearned Warranty Revenue 25,000 Warranty Revenue 25,000 ($150,000 * (20,000/120
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To: Bruce Darling From: Jordyn Peterson Date: October 28, 2014 Subject: Revenue Recognition The SEC provides criteria to help assess risks for the timing of revenue recognition. Recognizing revenue can be difficult to decide so auditors refer to the provided guidance to apply the concept that revenue should not be recognized until it is realized or is realizable and earned. The criteria to help decide when revenue should be recognized includes: * Pervasive evidence of an arrangement exists
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Major issues facing Autobytel is the intense completion with other online car-buying service providers, the turning over of dealerships they are partnered with and operating cost that are extremely high in comparison to revenues. Autobytel approximately 3000 dealers in North America in major metropolitan areas. Majority of expenses they are incurring are in relation to the extensive training provided and marketing. The auto retail industry generates approximately 1 trillion dollars a year, this
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bills | At home. | After you check and pay them, unless you need them to support tax filings. | Employer defined-benefit retirement-plan communications | At home. | Never. | Estate-planning documents | Safe-deposit box. | Never. | Household warranties and receipts | At home. | After you no longer own the household item. | Insurance policies | At home. | After you renew them. | Investment purchase confirmations and 1099s | At home. | Hold until you sell the securities, then keep with your
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