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CMA Part 1
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1. External financial reporting decisions
2. Planning, budgeting, and forecasting
3. Performance management
4. Cost management
5. Internal control
6. Technology and analytics
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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 are 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

Assurance warranty approach

  • Warranty cost estimated and recognized at sale
  • Liability recorded for expected warranty claims
  • No separate revenue recognized for warranty

Service warranty approach

  • Treated as separate performance obligation
  • Revenue allocated and recognized over warranty period
  • Deferred revenue and related expense recognized over time

Financial statement effects

  • Assurance: higher initial expense, liability on balance sheet
  • Service: deferred revenue, revenue and expense spread over warranty term
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Next  | 1.2.7.2 Warranty introduction
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Learning outcomes

The learning outcome statement related to warranties are 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

Assurance warranty approach

  • Warranty cost estimated and recognized at sale
  • Liability recorded for expected warranty claims
  • No separate revenue recognized for warranty

Service warranty approach

  • Treated as separate performance obligation
  • Revenue allocated and recognized over warranty period
  • Deferred revenue and related expense recognized over time

Financial statement effects

  • Assurance: higher initial expense, liability on balance sheet
  • Service: deferred revenue, revenue and expense spread over warranty term

More from Warranty

  • Warranty introduction
  • Service warranty approach
  • Assurance warranty approach