What analysis issues must we consider with respect to reported warranty liabilities? Answer yes or no The issues to consider with respect to warranty liability are whether it actually exists and what is its correct magnitude. Answer yes or no Warranty liability at any given time should equal the expected dollar cost of repairs not yet paid for. Answer yes or no Understating accrual of warranty liability understates current period income to the benefit of future income. Answer yes or no Warranty liability at any given time should equal the actual dollar cost of repairs already paid for. Answer yes or no Warranty liability must always be assumed to exist and to be at least 3% of the value of expected sales. Answer yes or no Understating accrual of warranty liability overstates current period income at the expense of future income.