Question

during 2017, trey corporation accrued warranty expense based on 3.5% of net sales revenue. during 2018, trey corporation revised its estimate to 4%. sales revenue was $2 million for each year. for the year ended december 31, 2018, the warranty-related entry would include a debit to:

Answer 1

For the year ended December 31, 2018, the warranty-related entry would include a debit to warranty expense of $80,000.

If it's miles impracticable to determine the cumulative impact of applying a trade-in accounting principle, then the new accounting principle should be applied prospectively as of the earliest date practicable. in this situation, the disclosures discussed in FSP 30.4.

Cumulative effect equals the difference between the actual retained profits suggested at the beginning of the yr using the antique approach and the retained income that would have been reported at the start of the year if the brand-new technique had been utilized in earlier years.

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