General Motors Corporation (GM) disclosed estimated product warranty payable for comparative years as follows:

Presume that GM’s sales were $147,049 million in Year 2 and that the total paid on warranty claims during Year 2 was $3,000 million.

a. Why are short-and long-term estimated warranty liabilities disclosed separately?

b. Provide the journal entry for the Year 2 product warranty expense.

c. What two conditions must be met in order for a product warranty liability to be reported in the financial statements?

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(in millions) Year 2 Year 1 Current estimated product warranty payable Noncurrent estimated product warranty payable $2,788 $2,994 4,802 5,338 Total $7,590 $8,332