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What is the effect on net income for leland corporation

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Reference no: EM132986741

Leland Corporation sells DVD players. The corporation also offers its customers a 4-year service-type warranty contract. On 1/1/24, Leland sold 10,000 warranty contracts at $50 each; Leland spent $45,000 servicing warranties during 2024 and $65,000 servicing warranties in 2025. Estimated warranty expense for the four-year period is $400,000. The Sales Warranty (Deferred Revenue) approach is applicable. Assume straight-line amortization.

Problem 1: What is the effect on 2025 Net Income?

a. $60,000
b. $65,000
c. $25,000
d. $35,000
e. $100,000

Reference no: EM132986741

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