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In essence, warranty expense is a provision or reserve that the company sets aside to meet its future obligations related to product warranties. This expense is a liability on the balance sheet and an operating expense on the income statement.

Example of a Warranty Liability ABC Company sells blue widgets. It has historically experienced a warranty expense of 0.1% of sales. In the current period, it sold $500,000 of blue widgets, so it records a debit of $500 to the warranty expense account and $500 to the warranty liability account.

Warranty expense is recognized in the same period as the sales for the products that were sold, if it is probable that an expense will be incurred and the company can estimate the amount of the expense.

Once the company estimates the warranty provision, it must record it as an expense. On the other hand, the company must also create a provision for the same amount. After that, every warranty claim does not become an expense. Instead, it decreases the warranty provision recorded in the financial statements.

A certificate given by an architect, in connection with a construction and engineering project, such as: A certificate of practical completion. A certificate of making good defects.

Structural Warranty Insurance offers 10 years protection.Moreover, the Architects Certificate only covers any structural design issues whereas the warranty covers structural defects AND construction defects which gives the client coverage on a much wider scope.

A PCC makes the professional consultant liable for 6 years, but does not provide cover for structural defects.

A PPC makes the architect liable for six years but does not provide cover for structural defects. Weighing up the Pros and Cons. Unlike a PCC, a structural warranty removes the need for you to prove negligence or blame against your professional consultant, typically an architect.

An architect's certificate is only a warranty in the sense that the issuing professional undertakes (by means of a signed CML certificate) that the subject property is built in accordance with the approved plans, complies with building regulations and is to a good standard.

Unlike a New Home Warranty, the PC Certificate is not a warranty instead it's a certificate that holds a statement from the relevant expert that the property in questions has been constructed in accordance with applicable building regulations, that the construction process has been monitored and that the work has