Cool Sound Ltd. manufactures a line of amplifiers that carry a three-year warranty against defects. Based on experience, the estimated warranty costs related to dollar sales are as follows: first year after sale-2% of sales; second year after sale-3% of sales; and third year after sale-4% of sales. Sales and actual warranty expenditures for the first three years of business were:

Instructions
(a) Calculate the amount that Cool Sound Ltd. should report as warranty expense on its 2017 income statement and as a warranty liability on its December 31, 2017 statement of financial position using the assurance-type warranty (expense-based approach). Assume that all sales are made evenly throughout each year and that warranty expenditures are also evenly spaced according to the rates above.
(b) Are assurance-type warranties recorded differently in IFRS and ASPE?
(c) Assume that Cool Sound's warranty expenditures in the first year after sale end up being 4% of sales, which is twice as much as was forecast. How would management account for this change?

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Sales Warranty Expenditures $16,500 47,200 83,000 2015 $810,000 2016 2017 1,070,000 1,036,000