Warranty Expense

USA Discussion in 'General Accountancy Discussion' started by Jason Taylor, Feb 14, 2017.

  1. Jason Taylor

    Jason Taylor

    Joined:
    Feb 24, 2016
    Messages:
    11
    Likes Received:
    0
    I understand the warranty expense and having to match the expense to the revenue and creating a liability based on a warranty estimate. However, please explain how to adjust the liability and expense when my estimate becomes overstated or understated.

    If I do not use all the liability during my warranty period, how do I adjust the liability to zero for that warranty period?

    Hope that makes sense.
     
    Jason Taylor, Feb 14, 2017
    #1
    1. Advertisements

  2. Jason Taylor

    Fidget VIP Member

    Joined:
    Jan 6, 2013
    Messages:
    397
    Likes Received:
    52
    Location:
    UK
    It's the same principle as a provision for bad debt.

    To increase it: Dr P&L and Cr Balance Sheet
    To decrease it: Dr Balance sheet and Cr P&L
     
    Fidget, Feb 16, 2017
    #2
    1. Advertisements

Ask a Question

Want to reply to this thread or ask your own question?

You'll need to choose a username for the site, which only take a couple of moments (here). After that, you can post your question and our members will help you out.