Celic Inc. manufactures and sells computers that include an assurance-type warranty for the first 90 days. Celic offers an optional extended coverage plan under which it will repair or replace any defective part for 3 years from the expiration of the assurance-type warranty. Because the optional extended coverage plan is sold sepa- rately, Celic determines that the 3 years of extended coverage represents a separate performance obligation. The total transaction price for the sale of a computer and the extended warranty is $3,600 on October 1, 2017, and Celic determines the standalone selling price of each is $3,200 and $400, respectively. Further, Celic estimates, based on historical experi- ence, it will incur $200 in costs to repair defects that arise within the 90-day coverage period for the assurance-type war- ranty. The cost of the equipment is $1,440. Assume that the $200 in costs to repair defects in the computers occurred on October 25, 2017.

question(a) Briefly describe the accounting for the service-type warranty after the 90-day assurance-type warranty period.