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Estimated warranty liabilities

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Discussion

Blue Raider, Inc. has always adjusted entries at the end of the period to record its estimated warranty liabilities. The company has hired a new manager, Sierra Jones, who objects to recording an expense and liability for warranty service on products that have not yet been brought in for warranty repairs. Jones thinks they should only report an expense if and when they do any warranty work. Explain in a paragraph or two why her recommendation would not be appropriate.

Reference no: EM133149084

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