- posted 14 years ago
I have a query regarding recognition of warranty sales.
A customer buys warranty for 3 years from a company in year 1. The Customer is entitled for only one claim during this period. The claim occurs during year 1 itself. How will the revenue be recognized?
I am of the opinion that the entire revenue should be recognized in year 1 itself because of the foll:
1. There is only one claim permissible and hence no future claims are admissible. 2. The amount is certain and quantifiable. 3. The economic benefit of the transaction is assured for the company.
Members, please post your opinions.