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Baxter & Baxter sells copy equipment. It grants all customers a 12-month warranty, agreeing to make necessary repairs within the following 12-month after-sale period free
Baxter & Baxter sells copy equipment. It grants all customers a 12-month warranty, agreeing to make necessary repairs within the following 12-month after-sale period free of charge. At the end of each year, the company estimates the total cost to be incurred during the next period under the warranties for equipment sold during the current period and charges that amount to expense, crediting a liability account. Is this appropriate accounting? Answer is yes or no
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