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Case 2 Suzuki Group (e-Text 13-51) Case 2 Suzuki Group Presented below is the current liabilities section and related note of Suzuki Group. (yen in

Case 2 Suzuki Group (e-Text 13-51)

Case 2 Suzuki Group Presented below is the current liabilities section and related note of Suzuki Group.

(yen in millions)
Current Year Prior Year
Current liabilities
Current portion of long-term debt 15,000 10,000
Short-term debt 2,668 405
Accounts payable 29,495 42,427
Accrued warranty 16,843 16,741
Accrued marketing programs 17,512 16,585
Other accrued liabilities 35,653 33,290
Accrued and deferred income taxes 16,206 17,348
Total current liabilities 133,377 136,796
Notes to Consolidated Financial Statements
Note 1 (in part): Summary of Significant Accounting Policies and Related Data
Accrued WarrantyThe company provides an accrual for future warranty costs based upon the relationship of prior years' sales to actual warranty costs.

The company provides an accrual for future warranty costs based upon the relationship of prior years' sales to actual warranty costs. Instructions Answer the following questions.

a. What type of warranty is Suzuki providing to customers?

b. Under what circumstance, if any, would it be appropriate for Suzuki to recognize unearned revenue on warranty contracts?

c. If Suzuki recognized unearned revenue on warranty contracts, how would it recognize this revenue in subsequent periods?

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