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ID: 2334168 • Letter: S
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s page ck my work mode : This shows what is correct or incorrect f for the work you have completed so far. It does not indicate completion. Return to question Volvo Group reports the following information for its product warranty costs as of December 31, 2014, along with provisions and utilizations of warranty liabilities for the year ended December 31, 2014 (SEK in millions) Provision for product warranty Warranty provisions are estimated with consideration of historical claims period, the average time-lag between faults occurring and claims to the company and anticipated changes in quality indexes Estimated costs for product warranties are recognized as cost of sales when the products are sold Differences between actual warranty claims and the estimated claims generally affect the recognized expense and provisions in future periods Refunds from suppliers, that decrease the Volvo Group's warranty costs, are recognized to the extent these are considered to be certain As of December 31, 2014 (2013) warranty cost provisions amount to 10,583 (9,881 statistics, the warranty Product warranty liabilities, December 31, 2013 Additional provisions to product warranty liabilities utilizations and reductions of product warranty liablities (,134) Product warranty 1iabilities, Decenber 31, 2014 SEK 9,881 7,836 18,583 1. & 2. Prepare Volvo's journal entry to record its estimated warranty liabilities (provisions) and costs (utilizations) related to its warranty program for 2014. Assume those costs involve replacements taken out of inventory, with no cash involved. (Enter your answers in millions of SEK)Explanation / Answer
Warranty expense reported in 2014 = Additional provision to product warranty liabilities = SEK 7836
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