Determine if this shall result in recognition of liabilities 16.Sale of goods with product warranty a. yes b. no
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Determine if this shall result in recognition of liabilities
16.Sale of goods with product warranty
a. yes
b. no
Step by step
Solved in 3 steps
- 15. If an entity gives a product warranty that has been issued directly by a manufacturer, dealer or retailer, which IFRS is likely to cover this warranty? a. IAS 32 Financial instruments - Presentation b. IAS 37 Provisions, contingent liabilities and contingent assets c. IFRS 17 Insurance contracts d. IFRS 9 Financial instruments 16. IFRS 17 provides that insurance contracts should a. Be covered by IAS 32 and IFRS 9 b. Comply with all existing IFRS c. Generally continue to be subject to existing accounting policies. d. Comply with the IFRS Framework document. 17. An insurance contract can contain both deposit and insurance elements. An example might be a reinsurance contract where the cedant receives a repayment of the premiums at a future date if there are no claims under the contract. Effectively this constitutes a loan by the cedant that will be repaid in the future. IFRS 17 requires that a. Each payment by the cedant is accounted for as loan advance and as payment for insurance…A contingent liability: Is always of a specific amount O Is a potential obligation that depends on a future event arising out of a past transaction or event O Is an obligation not requiring future payment O Is an obligation arising from the purchase of goods or services on credit O Is an obligation arising from a future event4. An encumbrance represents the estimated future liability for goods or services resulting from placing a purchase order or signing a contract. True or False
- 18. Which of the following loss contingencies is not usually accrued? a. product warranty obligationsb. premium offer obligationsc. risk of loss from fired. noncollectibility of receivables15. The expense warranty accrual method a. violates the matching conceptb. requires recognition in the period of sale of the estimated warranty expense and warrantyliabilityc. separates accounting for two components of the sales price: the price of the product andthe price of the warrantyd. debits warranty costs to expense in the period when warranty expenditures are madeWhich of the following is an account used in applying the Sales Warranty Approach, but not the Expense Warranty Approach? Select one: O a Estimated liability under warranties Ob. Warranty Expense Oc Unearned Warranty Revenue O d. Prepaid Warranty Expense
- An encumbrance represents the estimated future liabilities for goods or services resulting from placing a purchase order or signing a contract. a. True b. FalseWhat business circumstance could bring about a short-term note payable created from a purchase?Statement 1 : In accordance with IFRS 15, in accounting for customer premiums, the transaction price at the time of sale is recognized partly as revenue which is related to sale of goods and partly as a liability for the performance obligation to settle the transfer of the promised premium.Statement 2: In accounting for customer premiums in accordance with IFRS 15, there is a premium expense equivalent to the cost of premiums recognized upon redemption of these premiums. A.True, True B.True, False C.False, False D.False, True
- A(n) __________ warranty is a warranty in which the seller promises the customer that the good or service will function as specified in the contract amounts. a.promise-type b.assurance-type c.service-type d.functional-typeUnder PFRS 15, what is the specific point in time when the consignor satisfies is performance obligation under consignment contract? a. upon sale of consigned goods by consignee to final consumers b. upon signing of contract of consignment by consignor and consignee c. upon remittance of cash by consignee to consignor d. upon delivery of consigned goods by consignor to consignee18. Accounting for product warranty costs under an assurance-type warranty * a. is required for income tax purposes. b. is frequently justified on the basis of expediency when warranty costs are immaterial. c. charges an expense account when the seller performs in compliance with the warranty. d. represents accepted practice and should be used whenever the warranty is an integral and inseparable part of the sale.