70.2K

Verified Solution

Link Copied!

Case 2 Suzuki Group (Text 13-51)

Case 2 Suzuki Group Presented below is the current liabilities section and related note of Suzuki Group.

(yen in millions)
	Current Year	Prior Year
Current liabilities
Current portion of long-term debt	15,000	10,000
Short-term debt	2,668	405
Accounts payable	29,495	42,427
Accrued warranty	16,843	16,741
Accrued marketing programs	17,512	16,585
Other accrued liabilities	35,653	33,290
Accrued and deferred income taxes	16,206	17,348
Total current liabilities	133,377	136,796
Notes to Consolidated Financial Statements
Note 1 (in part): Summary of Significant Accounting Policies and Related Data
Accrued Warranty The company provides an accrual for future warranty costs based upon the relationship of prior years' sales to actual warranty costs.

The company provides an accrual for future warranty costs based upon the relationship of prior years' sales to actual warranty costs. Instructions Answer the following questions.

a. What type of warranty is Suzuki providing to customers?

b. Under what circumstance, if any, would it be appropriate for Suzuki to recognize unearned revenue on warranty contracts?

c. If Suzuki recognized unearned revenue on warranty contracts, how would it recognize this revenue in subsequent periods?

Answer & Explanation Solved by verified expert

See Answer