1.SarasotaCorporation 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 sale1% of sales; second year after sale2% of sales; and third year after sale3% of sales. Sales and actual warranty expenditures for the first three years of business were:

SalesWarranty Expenditures

2018 $840,000 $16,800

2019 1,150,000 47,800

2020 1,066,000 87,000

Calculate the amount thatSarasotaLtd. should report as warranty expense on its 2020 income statement and as a warranty liability on its December 31, 2020 SFP 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.

Warranty expense$.....

Warranty liability$.....

2.FlintCorp. was recently sued by a competitor for patent infringement. Lawyers have determined that it is probable (and very likely) thatFlintwill lose the case, and thatFlintwill have to pay between $110,000and $310,000in damages.Flintfollows IFRS.

What entry, if any, shouldFlintrecord in respect of this lawsuit?

What entry, if any, shouldFlintrecord in respect of this lawsuit assuming thatFlintfollows ASPE?