Question
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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