Industry Insights

Warranty Accounting Under New Revenue Standard Clarified

May 2015

Entities should not assume that today’s accounting for warranties will remain unchanged under the new standard. There is a subtle difference between the new revenue standard and current generally accepted accounting principles. While warranty accounting remains unchanged, additional warranties may need to be accounted for as separate performance obligations under the new revenue recognition standard, if the warranty provides the customer with additional assurance services. Entities will need to evaluate each type of warranty offered to determine the proper accounting, including warranties that are not separately priced.

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