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CMA Part 1
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Textbook
Introduction
1. External financial reporting decisions
2. Planning, budgeting, and forecasting
3. Performance management
4. Cost management
5. Internal control
6. Technology and analytics
Wrapping up
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1.2.7.1 Learning outcomes
Achievable CMA Part 1
1. External financial reporting decisions
1.2. Financial transactions
1.2.7. Warranty
Our CMA Part 1 course is currently in development and is a work-in-progress.

Learning outcomes

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The learning outcome statement related to warranties is as follows:

  1. Compare the effect on financial statements when using either the assurance warranty approach or the service warranty approach for accounting for warranties.

Warranty Accounting Approaches

  • Assurance-type warranty: expense/liability recorded immediately at sale; no separate revenue
  • Service-type warranty: separate performance obligation; revenue allocated and recognized over coverage period
  • Compare effects on expense/revenue timing and resulting liabilities
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Next  | 1.2.7.2 Warranty introduction
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Learning outcomes

The learning outcome statement related to warranties is as follows:

  1. Compare the effect on financial statements when using either the assurance warranty approach or the service warranty approach for accounting for warranties.
Key points

Warranty Accounting Approaches

  • Assurance-type warranty: expense/liability recorded immediately at sale; no separate revenue
  • Service-type warranty: separate performance obligation; revenue allocated and recognized over coverage period
  • Compare effects on expense/revenue timing and resulting liabilities

More from Warranty

  • Warranty introduction
  • Service warranty approach
  • Assurance warranty approach