Ford Motor Company (F) disclosed the following estimated product warranty payable for two recent years. Fords sales
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Ford Motor Company (F) disclosed the following estimated product warranty payable for two recent years.
Ford’s sales in its automotive sector were $145,653 million in Year 2 and $141,546 million in Year 1. Assume that the total paid on warranty claims during Year 2 was $3,620 million.
a. Illustrate the effects on the accounts and financial statements for the Year 2 product warranty expense.
b. Explain the $336 ($5,296 2 $4,960) million increase in the total warranty liability from Year 1 to Year 2.
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