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Accrued product warranty General Motors Corporation (GM) disclosed estimated product warranty payable for comparative years as follows: (in millions) Year 2 Year1 Current estimated product warranty payable 3059 $2,884 Noncurrent estimated product warranty payable 4327 4,147 Total 7386 $7.03 Presume that GM's sales were $135,592 million in Year 2 and that the total paid on warranty claims during Year 2 was $3,000 million. a. Why are short and long-term estimated warranty liabilities disclosed separately? b. Provide the journal entry for the Year 2 product Warranty expense. c. What two conditions must be met in order for a product warranty liability to be reported in the financial Statements?

BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094
BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094

Solutions

Chapter
Section
Chapter 11, Problem 11.21EX
Textbook Problem

Accrued product warranty

General Motors Corporation (GM) disclosed estimated product warranty payable for comparative years as follows:

(in millions)
Year 2 Year1
Current estimated product warranty payable 3059 $2,884
Noncurrent estimated product warranty payable 4327 4,147
Total 7386 $7.03

Presume that GM's sales were $135,592 million in Year 2 and that the total paid on warranty claims during Year 2 was $3,000 million.

  1. a. Why are short and long-term estimated warranty liabilities disclosed separately?
  2. b. Provide the journal entry for the Year 2 product Warranty expense.
  3. c. What two conditions must be met in order for a product warranty liability to be reported in the financial Statements?

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Chapter 11 Solutions

Accounting
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