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Manufacturer Warranty Plan TypesManufacturer warranty plans typically cover parts and systems that break down due to design flaws or defects in factory-installed parts. Most new or CPO vehicles come with this limited form of car protection.

Accounting for warranties is quite similar to accounting for bad and doubtful debts. It is based on matching concept, which requires a company to estimate the expected warranty payable (also called warranty liability or provision for warranty expense) and record it at the time of sale.