Able Inc. sells a new product with a 2-year warranty. The company estimates that during the two years, the costs and related probabilities are: Year

1:$10,000

(20%)

and

$20,000(80%)

; Year

2$15,000(50%)

and

$25,000(50%)

The company's effective interest rate is

4%

. Assuming the warranty costs are settled at the end of Years 1 and 2, calculate the estimated warranty liability using the expected cash flow method.

Able Inc. sells a new product with a 2 -year warranty. The company estimates that during the two years, the costs and related probabilities are: Year 1:$10,000 (20%) and $20,000(80%); Year 2$15,000(50%) and $25,000(50%) The company's effective interest rate is 4%. Assuming the warranty costs are settled at the end of Years 1 and 2 , calculate the estimated warranty liability using the expected cash flow method