On January 1,2019, ABC Company introduced a new line of product that carries a 3 year warranty against factory defects. The product warranties provide assurance that the new line of product will function as intended based on agreed-upon specifications. Estimated warranty costs related to peso sales are as follows: 2% of sales in the year of sale, 4% of sales in the year after sale, and 6% of sales in the second year after sale. Sales and warranty expenditures for the period 2019 to 2021 were as follows: Sales Actual warranty expenditures 2019 P 5,000,000 P 100,000 2020 7,500,00 150,000 2021 10,000,000 200,000 The company's reporting period is a calendar year. How much is the warranty liability as of December 31,2021?
On January 1,2019, ABC Company introduced a new line of product that carries a 3 year warranty against factory defects. The product warranties provide assurance that the new line of product will function as intended based on agreed-upon specifications.
Estimated warranty costs related to peso sales are as follows: 2% of sales in the year of sale, 4% of sales in the year after sale, and 6% of sales in the second year after sale.
Sales and warranty expenditures for the period 2019 to 2021 were as follows:
Sales Actual warranty expenditures
2019 P 5,000,000 P 100,000
2020 7,500,00 150,000
2021 10,000,000 200,000
The company's reporting period is a calendar year.
How much is the warranty liability as of December 31,2021?
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