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    anita5143 Posts: 7, Reputation: 1
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    #1

    Nov 16, 2010, 10:25 AM
    Estimated warranty liability
    How do I Use a horizontal model (or a T-account of the Estimated Warranty Liability) to show the effect of having a warranty program?
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    Just Looking Posts: 1,610, Reputation: 480
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    #2

    Nov 16, 2010, 10:33 AM

    When you have a warranty program, you have an estimate of the cost per item sold. The estimated warranty expense and the related warranty should be recognized at the time of the original sale of the product. Using T-accounts, you would have a debit to Warranty Expense and a credit to Warranty Contingency.
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