Explain whether should record the warranty as a liability

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Speedy Cycles has manufactured traditional bicycles for many years. These are sold with a 12- month warranty for parts and labour. During the final three months of the current year, it released a new product, its first ever electric assisted bicycle. Although it offers the same warranty as traditional bicycles, Speedy Cycles wants to exclude this new product from its warranty provision.

Question 1: Explain, with reference to the AASB 2020 Conceptual Framework, whether should record the warranty as a liability for its new product, the electric assisted bicycle, in preparing its financial statements.

Reference no: EM132882868

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