Case 3: Lowland Appliance Stores offers customers purchasing its appliances separately priced (extended) warranties. Lowland services these extended warranties. Its customers can receive no refunds for not using these warranties, and, of course, Lowland must honor these contractsregardless of any future costs in doing so. It also "tracks" the profits and losses these types of warranties generate by appliance categoryin order to help maintain a competitive price and costing structures. How should Lowland recognize the revenues and expenses of such extended warranties?