Solution-What amount should Koi report as a liability at

What amount should Koi report as a liability at December

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Question - In 2019, Koi Corporation began selling a new line of products that carry a two-year warranty against defects. Based upon past experience with other products, the estimated warranty costs related to peso sales are as follows:

First year of warranty 5%

Second year of warranty 9%

Sales and actual warranty expenditures for 2019 and 2020 are presented below:

	2019	2020
Sales	P3,000,000	P4,000,000
Actual warranty expenditures	100,000	250,000

1. Using the accrual method, what amount should Koi report as a liability at December 31, 2020?

2. Using the expense as incurred method, what amount should Koi report as a liability at December 31, 2020?

Reference no: EM133055414

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What amount should Koi report as a liability at December

Reference no: EM133055414

Reference no: EM133055414

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