Home > Uncategorized, Warranty Liabilty (part 3) > Warranty Liability (part 3)

Warranty Liability (part 3)

CPA-WANNABE wrote on Sat, 29 August 2009 20:45


1.Anong pwedeng tanong para ang sagot eh yung AJE at yearend? Actual repairs incurred?

bale siguro “How much will the adjustment for Warranty Liability be” assuming equal ang actual cash outlay sa estimate.

CPA-WANNABE wrote on Sat, 29 August 2009 20:45

2. Ang warranty expense to be presented in the IS ay yung Sales * Summation of Annual percentage pa rin?
2009- 14000
2010- 28000
2011- 21000

Yup, yun mismo ung expense UNLESS inadjust (pag hindi equal ung actual cash outlay sa estimate.

Estimate and Actual Cash Outlay not Equal

Ok, kunyari sa problem given sa itaas, may additional info:

Actual costs incurred for servicing the warranty to customers:

2009 = 1,250
2010 = 7,100
2011 = 15,000

Kanina kasi, kung mapapansin nyo sa problem sabi “evenly throughout the period” ang cash outlay. Nangyayari minsan (lalo pag gusto pahirapan ung problem) may given na actual cash outlay tapos ung derecognition ng Liability, evenly throughout the period parin. So, mag-iiba na ung AJE mo.

So, sa 2009 may entry ka na:

(dr) Provision for Warranty 1,250
(cr) Cash (yung actual cash outlay) 1,250

Ok, dito yung twist. SINCE may idea ka kung magkano dapat ang cash outlay mo at significantly malayo sya sa estimate mo, kelangan mo iadjust ung Warranty Expense mo. Susundan mo parin yung Estimate mo ng Ending Balance ng Warranty Liability based dun sa BOXES na ginawa mo. Iaadjust mo lang ung expense. SO sa 2009, para maging P12,500 ang ending balance:

(dr) Provision for Warranty 250
(cr) Warranty Expense 250

So sa year 2009, ang warranty Expense mo ay P13,750

FOR 2010

for the cash outlay

(dr) Provision for Warranty 7,100
(cr) Cash (yung actual cash outlay) 7,100

dito naman, sumobra ung cash outlay mo sa estimate mo so dadagdagan mo sa aje mo ung warranty expense mo para sumakto sa ending balance na $33,500.

(dr) Warranty Expense 100
(cr) Provision for Warranty 100

So ang Warranty Expense mo for 2010 ay P28,100

FOR 2011

for the cash outlay

(dr) Provision for Warranty 15,000
(cr) Cash (yung actual cash outlay) 15,000

adjustment of warranty expense to arrive at the correct ending balance:

(dr) Provision for Warranty 750
(cr) Warranty Expense 750

So ang warranty expense mo for 2011 ay P20,250

eto ang summary para mas magets nyo


basta tanong tanong lang kayo! Smile

Technique: USE T-ACCOUNT.

[Updated on: ]

  1. jenny
    February 10, 2010 at 8:59 am

    kuya, pano po ba to?hindi ko po kasi naintindihan yung discussion sa amin eh….

    A Company leased office premises to B Company for a 5 year term beginning January 1, 2009. under the terms of the operating lease, rent for the first year is P800,000 and rent for years 2 through 5 is P1,250,000 per annum. however, as an inducement to enter the lease, A granted B the first 6 mos. of the lease rent-free. in its December 31, 2009 income statement, what amount should A report as rental income?

    kuya, patulong…pasensiya na po.hindi ko kasi maintindihan. thank you in advance…

  2. jenny
    February 16, 2010 at 2:59 am

    thank u po ng madami kuya joseph…..

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