Rewrite this: The cost of product warranties (or product guarantees) cannot be predicted with certainty. However, to match expenses and revenues, we estimate the cost. The estimated warranty liability is credited and warranty expense is debited in the reporting period in which the product under warranty is sold. In this case, the estimate is probably "softer" than normal because the company is new and has little experience in these estimates. However, Craig presumably made the estimates on the basis of the best information available. The current effort to change the estimate clearly is motivated by the desire to "window dress" performance.

Answer rating: 100% (QA)

The exact cost of product warranties or guarantees cannot be accurately determin... View the full answer