Innovative Inc. offers a one-year warranty on all products it sold. Assume that at the start...
Innovative Inc. offers a one-year warranty on all products it sold. Assume that at the start of 2016 the company’s balance sheet included an accrued warranty liability of $15.4 million, and at the end of 2016 the accrued warranty liability balance was $11.5 million. It paid $65.8 million during 2016 to repair and/or replace goods under warranty. How much warranty expense did Innovative record during 2016?
Homework Answers
| The amount of warranty expense recorded by Innovative Inc during 2016 can be computed as follows: | |||
| Balance of accrued warranty liability at the end of 2016 | $11.5 million | ||
| Add: Amount paid during 2016 to repair and/or replace goods under warranty | $65.8 million | ||
| Less: Balance of accrued warranty liability at the start of 2016 | $15.4 million | ||
| Warranty expense recorded during 2016 | $61.9 million |
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