While TechMan maintains high standards in producing electronic components and manufacturing tools, some manufacturing defects are inevitable. For the year ended 30 June 2023, TechMan recorded net sales of $990,000 (GST inclusive) and sales returns of $12,000 (GST inclusive). Historically, approximately 1% of net sales result in warranty claims. The management believes that warranty costs should be recognized as an expense only when the claims actually occur, typically in the period following the sale.

With reference to the Conceptual Framework, evaluate whether you agree with TechMan approach to record warranties as an expense solely in the period when claims are made. If you disagree, explain how warrantiesfor the year ended 30 June 2023 should be accounted for, including the necessary double-entry accounting entries.