Question

Both Polaris and Arctic Cat provide warranties on the products they sell. Accurate estimates of these future warranty claims are important. Access the annual report or 10-K for both Polaris (from Appendix A) and Arctic Cat. The Polaris report is for the year ended December 31, 2011, and the Arctic Cat report is for the year ended March 31, 2011.

Required
1. Read the “Product warranties” section of the “Organization and Significant Accounting Policies” foot-note for Polaris. For each of the three years reported, compare the dollar amounts of the annual warranty expense and actual warranty claims paid. Is Polaris’ warranty expense higher, lower, or about the same as its warranty claims paid?
2. Read the “Product Warranties” section of the “Summary of Significant Accounting Policies” footnote for Arctic Cat. For each of the three years reported, compare the dollar amounts of the annual warranty expense and actual warranty claims paid. Is Arctic Cat’s warranty expense higher, lower, or about the same as its warranty claims paid?
3. Using the answers from parts (1) and (2), which company made more accurate estimates of warranty costs over the most recent three years?



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  • CreatedNovember 26, 2013
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