Question
Appliances R Us sold 1,000 high-end convection ovens during 2023 at a price of $1,620, with a warranty guarantee that the product was free from
Appliances R Us sold 1,000 high-end convection ovens during 2023 at a price of $1,620, with a warranty guarantee that the product was free from any defects. The cost of each oven is $1,090 and includes a $10 one-year assurance warranty. In addition, Appliances R Us sold extended warranties on 600 ovens for four years beyond the one-year period for $210,000.
Which of the following statements is true?
a. Extended warranty is considered a separate performance obligation.
b. Appliance's R Us will credit $210,000 revenue for the extended warranty sold.
c. Appliance's R Us will debit $0 warranty expense in 2023.
d. Assurance warranty is considered a separate performance obligation.
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