Accrued product warranty Obj. 5 General Motors Company (GM) disclosed estimated product warranty payable for comparative years as follows:

(in millions)

Current Year Prior Year Current estimated product warranty payable $3,517 $3,487 Noncurrent estimated product warranty payable 6,184 5,792 Total $9,701 $9,279 Assume that GM’s sales were $166,380 million in the current year and that the total paid on warranty claims during the current year was $3,710 million.

a. Why are short- and long-term estimated warranty liabilities separately disclosed?

b. Provide the journal entry for the current year product warranty expense.

c. What two conditions must be met in order for a product warranty liability to be reported in the financial statements?

AppendixLO1