Accounting · Warranty Accounting
Regarding standard warranty repair work carried out on goods previously sold, how should the $60,000 cost of parts used in warranty repair be accounted for?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Cost of sales will be reduced by $60,000 for the parts used.
- 2Revenue should include $60,000 to offset actual expenses incurred.
- 3Cost of sales will include $60,000 for the cost of the goods/parts used.✓
- 4Revenue should include $80,000 to reflect the normal retail selling value.
Correct answer
Cost of sales will include $60,000 for the cost of the goods/parts used.
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