Determine the fair value of the warranty liability for sales

Assignment Help Financial Accounting
Reference no: EM13872572

Purpose: This exercise will apply the expected cash flow approach.

Ozzie Electronics sells high-end plasma TVs and offers a 3-year warranty on all new TVs sold. Ozzie has entered into an agreement with Electronic Service Labs to provide all warranty services on the 95 TVs sold in 2013. The controller for Ozzie estimates the following expected warranty cash outflow associated with the TVs sold in 2013.


Cash Flow Estimate

Probability Assessment

2014

$20,000

20%


30,000

60%


40,000

20%

2015

$25,000

30%


30,000

50%


45,000

20%

2016

$30,000

20%


45,000

40%

 

60,000

40%

Instructions

Determine the fair value of the warranty liability for the sales made in 2013. Use expected cash flow and present value techniques. Use an annual discount rate of 6%.

Reference no: EM13872572

Questions Cloud

Research on appropriate grouping strategies for students : For this task, begin by conducting your own research on appropriate grouping strategies for students with special needs. Write a paper to address the following points: Grouping with similar ability-peers when important for learning (examples: reading..
Describe the rise or fall in the equilibrium price : Describe the rise or fall in the equilibrium price and quantity
How this error would effect the amounts ofcost of goods sold : Repeat M7-16, except assume the 2015 ending inventory was over stated by $ 100,000. Refer M7-16 Assume the 2015 ending inventory of Shea's Shrimp Shack was understated by $ 10,000. Explain how this error would affect the amounts reported for cost of ..
Employees to accumulate vacation leave and to receive : Sophie County allows its employees to earn 10 days of vacation leave every year. It also allows employees to accumulate vacation leave and to receive cash for up to 20 days of leave on termination or retirement
Determine the fair value of the warranty liability for sales : Determine the fair value of the warranty liability for the sales made in 2013. Use expected cash flow and present value techniques. Use an annual discount rate of 6%.
A company incurs the following costs : A company incurs the following costs, which may be capital expenditures or operating expenditures.
Create a gouraud light model : Create a Gouraud light model - Experiment with the different component of light and create a camera class that will enable the user to manipulate the camera.
Determining the initial speed : A proton (mass m = 1.67 x 10-27 kg) is being accelerated along a straight line at 3.6 x 1015 m/s2 in a machine. If the proton has an initial speed of 2.4 x 107 m/s and travels 3.5 cm, what then is?
The town counsel thought he could settle the second claim : The town counsel thought he could settle the second claim for about $ 11,000, but he expected negotiations to drag on for 18 months before reaching agreement. Based on this information, prepare the journal entry (if needed) to adjust Punkeytown 20..

Reviews

Write a Review

Financial Accounting Questions & Answers

  Financial statement analysis and preparation

Financial Statement Analysis and Preparation

  Shareholder of a company

Describe the ways that a person can become a shareholder of a company. Why Wal-Mart would split its stock?

  Financial and accounting principles

An understanding of financial and accounting principles can be a valuable tool for managers. While not all managers will find themselves calculating financial ratios or preparing annual financial data.

  Prepare a statement of cash flow using the direct method

Prepare a Statement of Cash Flow using the Direct Method and Prepare the Operations section of the Statement of Cash Flow using the Indirect Method.

  Financial accounting assignment

This assignment has one case study and two question apart from case study. Questions related to document Liquidation question and Company financial statements question - Torquay Limited

  Prepare general journal entries for goela

Prepare general journal entries for Goela Ltd

  Principles of financial accounting

Prepare the journal entry to record the acquisition of the assets.

  Prepare general journal entries to record the transactions

Prepare general journal entries to record the transactions, assuming use of the periodic inventory system

  Global reporting initiative

Compare the view espoused by the economist Milton Friedman about the social responsibilities of business with the views express by Stigler.

  Explain the iasb conceptual frameworks

Explain the IASB Conceptual Framework's perspective of users and their decisions.

  Determine the company''s financial statements

T he focus of the report is to determine the extent to which you are comfortable relying on the financial statements as presented by management .

  Computation of free cash flow

Computation of Free Cash Flow

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd