Classify Required Field Warranty For Free

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IFRS guidance requires an entity to account for warranties that are not a 'separately identifiable component' in ance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets, which requires an entity to recognize a warranty obligation and corresponding expense for that warranty.

Additionally, companies record warranty expenses as debits to warranty expense accounts and as credits to liability accounts. When replacing a product, a company would deduct from both the inventory and liability accounts, as the replacement would come from the company's product inventory.