( a ) A manufacturer gives warranties at the time of sale to purchasers of its product....
Fantastic news! We've Found the answer you've been seeking!
Question:
a A manufacturer gives warranties at the time of sale to purchasers of its product.
Under the terms of the contract for sale, the manufacturer undertakes to make good
by repair or replacement, manufacturing defects that become apparent within three
years from the date of sale. On past experience, it is probable that there will be
some claims under the warranties.
Past experience suggests that of the goods sold will have no defects, will
have minor defects and will have major defects. If minor defects were detected
in all products sold, the cost of repairs would be $; if major defects were
detected in all products sold, the cost would be $
b During the year ended June Parent company guarantees borrowings of
Subsidiary company which amounts to $ At the time of the guarantee,
Subsidiarys financial position was sound. During the year ended June the
financial condition of Subsidiary company deteriorates and at June
Subsidiary company files for protection from its creditors.
Requirements:
How should this be treated in Parents financial statements for the year ended
i June and marks
ii June
Related Book For
Posted Date: