accounting question

Question 2 Conceptual Framework

Solar Me Up Ltd has been trading for a number of years. Solar Me Up Ltd sells gas-powered heating products with a 12-month warranty. Warranty claims on its existing products normally average around 5% of sales.

From 1 July 2020, Solar Me Up Ltd commenced selling, a new heater it developed using only solar power that also has a 12-month warranty. This new heater uses unique technology that has never been incorporated into a heater previously.

Sales of the new heater for the year ended 30 June 2021 were $3,000,000.

Required:

2) Explain with reference the relevant Conceptual Framework denition and recognition criteria whether Solar Me Up Ltd should record the warranty for its new solar heater as a liability for the year ended 30 June 2021.