Landfall Navigation began operations in 2017 and provides a one year warrenty on the products it sells. They estimate that 20,000 of the 400,000 units sold in 2017 will be returned for repairs and that these repairs will cost $8 per unit. The cost of repairing 16,000 units presented for service in 2017 was $128,000. Landfall should report Warranty expense of $32,000 for 2017 Warranty expense of $160,000 for 2017. Warranty liability of $160,000 on Dec 31, 2017 No warranty obligation on Dec 31, 2017, since this is only a contingent liability.