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3. Xin Co. manufactures specialty bike accessories. The company is most well known for its product quality, and it has offered one of the best warranties in the industry on its higher-priced productsa lifetime guarantee. The warranty on these products is included in the sales price. Xin has a contract with a service company, which performs all warranty work on Xin products. Under the contract, Xin guarantees the service company at least $200,000 of warranty work for each year of the 3-year contract. The recent economic recession has been hard on Xin's business, and sales for its higher-end products have been especially adversely impacted. As a result, Xin is planning to restructure its high-quality lines by moving manufacturing for those products into one of its other factories, shutting down assembly lines, and terminating workers. In order to keep some workers on-board, Xin plans to bring all warranty work in-house. It can terminate the current warranty contract by making a one-time termination payment of $75,000. The restructuring plans have been discussed by management during November 2019; they plan to get approval from the board of directors at the December board meeting and execute the restructuring in early 2020. Given the company's past success, the accounting for restructuring activities has never come up. Xin's top management has asked you to address the following questions for the upcoming meeting: | Restructuring costs: a. When should Xin recognize liabilities arising from the restructuring? b. What costs can be included? c. What costs can be excluded? Service contract: d. Does Xin have a liability related to the service contract? Explain. e. If Xin has a liability, at what amount should it be recorded

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