On January 2, 2020, Monty Company sells production equipment to Fargo Inc. for $47,000. Monty includes a 2-year assurance warranty service with the sale of all its equipment. The customer receives and pays for the equipment on January 2, 2020. During 2020, Monty incurs costs related to warranties of $870. At December 31, 2020, Monty estimates that $690 of warranty costs will be incurred in the second year of the warranty.