Climbing Entity (CE) Started Selling Harnesses to Mountain Climbers Around

Question

Examlex · Accepted Answer

The Answer is CE will determine whether to recognize a provision by evaluating the three criteria.
1) Does FE have a present obligation as a result of a past event?
Yes. The obligating event was the sale of the harnesses with a warranty attached to the sale.
2) Is it more likely than not that an outflow of resources will be required to fulfill the obligation?
Yes. CE anticipates that harnesses will be returned and that it will refund the purchase prices.
3) Can the amount of the obligation be reasonably estimated?
Yes. The cost of a refund or warranty is known and thus the total cost can be reasonably estimated.
Therefore, CE must recognize a provision and measure at the best estimate of how much it will cost to settle the warranty obligation (refund/repair the harnesses).

Climbing Entity (CE) Started Selling Harnesses to Mountain Climbers Around

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Climbing Entity (CE) Started Selling Harnesses to Mountain Climbers Around

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Correct Answer:
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