Warranty Liability
Warranty liability refers to the potential future costs a company may incur due to the warranty services promised to customers on its products or services.
Benefits
Warranty liability reflects potential future costs related to warranty services on products.
Frequently Asked Questions
What does "warranty liability" mean?
Warranty liability is the obligation a company has to cover repair or replacement costs under a product warranty.
What is warranty liability classified as?
Warranty liability is classified as a contingent liability on a company`s balance sheet.
What is an assurance warranty?
An assurance warranty guarantees that a product will meet certain quality and performance standards for a set time.
Key Takeaway
Warranty liability accounts for future costs related to product warranty services.