Linen Ltd commenced business operations on 1 July 2018 and sells electronic products with a two...
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Linen Ltd commenced business operations on 1 July 2018 and sells electronic products with a two (2) year warranty that is effective from the date of sale. Linen Ltd's management accountant recently provided the following the information about the expected warranty repairs in relation to total sales for the year ended 30 June 2019 and 2020. FY FY 2019 2020 Estimated cost of minor defect repairs for total sales during the year 428701 839304 Estimated cost of major defect repairs for total sales during the year 1002695 850824 Estimated % of products sold during the year having no defects 60% 50% Estimated % of products sold during the year having minor defects 30% 25% Estimated % of products sold during the year having major defects 10% 25% Expected timing for settlement of warranty payments for minor defects - 2020 65% na -2021 35% 40% -2022 na 60% Expected timing for settlement of warranty payments for major defects - 2020 50% na -2021 50% 90% -2022 na 10% The effect of discounting is considered to be immaterial. What is the current portion of the provision for warranties at 30 June 2020? Linen Ltd commenced business operations on 1 July 2018 and sells electronic products with a two (2) year warranty that is effective from the date of sale. Linen Ltd's management accountant recently provided the following the information about the expected warranty repairs in relation to total sales for the year ended 30 June 2019 and 2020. FY FY 2019 2020 Estimated cost of minor defect repairs for total sales during the year 428701 839304 Estimated cost of major defect repairs for total sales during the year 1002695 850824 Estimated % of products sold during the year having no defects 60% 50% Estimated % of products sold during the year having minor defects 30% 25% Estimated % of products sold during the year having major defects 10% 25% Expected timing for settlement of warranty payments for minor defects - 2020 65% na -2021 35% 40% -2022 na 60% Expected timing for settlement of warranty payments for major defects - 2020 50% na -2021 50% 90% -2022 na 10% The effect of discounting is considered to be immaterial. What is the current portion of the provision for warranties at 30 June 2020?
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Related Book For
Intermediate Accounting Reporting and Analysis
ISBN: 978-1285453828
2nd edition
Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Posted Date:
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