In March 2016, Emmett Motors began selling extended warranties for the vehicles it sells. The extended warranties cover parts and labor for all repairs to brakes and power train. Emmett sold $10,000 of the extended warranties in March, and estimates that it will incur $6,000 of cost over the five-year time period to fulfill them (the present value of the $6,000 is $5,000). In March 2016, Emmett would record:
(i). A contingent liability of $6,000
(ii). A contingent liability of $5,000
(iii). Deferred revenue of $10,000
(iv). A contingent liability of $6,000 and deferred revenue of $10,000