Discussion question

You are a CPA working for GE. You are responsible for managing the manufacturer’s warranties and the point of sale, add-on-warranties that customers purchase:

• Explain the accounting for each warranty type, along with the impact on the financial statements.
• Explain why the reporting of each differs.
• Include each type of warranty's redemption and expiration process and their effect on the income statement and balance sheet.
• Be sure to provide your rationale and specific examples.