Accounting for Warranty Expense

[@osomi3503]

9 years later and u are still the king around students. Much love for your work! Appreciate these quick vids soo much❤

[@saddestdayever1276]

Thank you so much for explaining how to journalize our assurance type warranty

[@max-zl1vm]

these videos are worth so much

[@chrisibrahim4519]

Thank you! Could you please let me know how to watch your videos in order?

[@Edspira]

Chris, I have 144 financial accounting videos on my website which are organized much better than the KZbin channel. All the content is free, and I'm working on getting written content and exercises to go with the videos. You can check it out here: edspira.com/courses/financial-accounting Thanks for watching!

[@shahariarhasan7861]

Great explanation...👍👌

[@Nick-yn2uz]

Great explanation. Thank you!

[@Edspira]

+Nicholas Kilmurray My pleasure! Best wishes :)

[@bookedandbeing]

This was sooo helpful! Thank you thank you.

[@maddisonzapach1772]

Suppose no-one made a claim in year 2- how would you then write off the Warranty Liability account?

[@dukejt]

No need to write off the Warranty Liability account. Just leave the balance for future warranty claim use.

[@MyFinancialFocus]

Am I the only one who watches these videos for fun and not for college?

[@jnkvngz2965]

me too

[@4Players1Game]

Why dont we put the expense on jan 1 2017 to match the sales instead of adjusting it on dec 31 2017?

[@leninvale4717]

Because the accrual of expenses and related liabilities is treated as an adjustment, hence in this case, done on Dec. 31, 2017 and not on the date of the sale.

[@abhinavtheegala3945]

Good explanation

[@kelas2ipajakstan632]

thank you sooo much

[@KomalSharma_13]

Thank you so much

[@josiahnitu7341]

I didn't get the idea how he credit the inventory to settle the liability.need ur clarification please.

[@owu350]

me too. why did he deduct on his inventory when there is no claim. Im confuse.

[@alirazayousuf707]

Sir, suppose that in year two, we have an actual expense of 7000 again. what will we do then ?

[@sleepydots1451]

Warranty liability 3,000 Inventory. 3000 Warranty expense 4,000 Inventory. 4000

[@ziaulislam5319]

@@mahwishirfan1980 I'm so confuse in this provision for warranty concept.

[@binhlucnhitieu5898]

Dr: Warranty liability 3000 Dr: Warranty expense 4000 Cr: Inventory 7000

[@matthewwei5248]

You’re a hero

[@snoopyjian0130]

if the actual warranty given is more than we estimated how we recorded

[@mimialemayehu4387]

very helpful! Thank you!

[@Alice-gl6um]

Hi Edspira! I have a question! I read a quotation from Wiley CPA Excel and so confused. They say certain Corporations and Partnerships with C Coporation as partners, Tax shelters, etc, these entities must use "accrual accountnig" instead of cash accounting for tax purposes. But what does it mean? I thought all the taxes are cash-based! That's why we have so many differences between the GAAP income and tax income right, except we have some tax-exempt stuff.... I am so confused! Please kindly advise

[@Alice-gl6um]

In particular, from the Wiley Question. I am so confused, is the answer $27,000 because Ral is not a business entity? if it was a business entity, then what will be the answer? And sir, I remember I saw somewhere saying even though it is considered as a "constructive receipt", if it covers more than 12 months, it gotta be prorated on the number of months coverd!!! Sir I am so confused please help ! Please refer to the question below Question: On December 1, 2018, Ral received advance rental of $27,000 from a tenant for a three-year lease commencing January 1, 2019 to cover rents for the years 2019, 2020, and 2021. In conformity with GAAP, Ral did not include any part of this rental in its income statement for the year ended December 31, 2018. Answer: For accrual-based taxpayers, items generally are included in gross income for the year in which the income is earned. However, for tax purposes, income is earned when (1) all the events have occurred to attach the taxpayer's right to receive the income and (2) the amount of income can be determined with reasonable accuracy. Cash based taxpayers report income when it is actually received or constructively received (i.e., in the taxpayer's control). Since all the events have occurred to attach Ral Corp.'s right to receive the income and the amount of income can be determined with reasonable accuracy, the corporation must report $27,000 in rental revenue for 2019. It is irrelevant that the rental revenue covers the following years.

[@kimgatnor988]

that is good

[@laszlobiebuyck9991]

What is a warranty provision guys?

[@karan_karan_karan]

[@Edspira]

😀

[@eunicejaneguiwan3651]

thank u

[@eunicejaneguiwan3651]

thank u

[@eunicejaneguiwan3651]

thank u

[@eunicejaneguiwan3651]

thank u

[@eunicejaneguiwan3651]

thank u

[@eunicejaneguiwan3651]

thank u