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Dusty johnson is the accounting and finance manager

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Reference no: EM13901410

1.Dusty Johnson is the accounting and finance manager for a manufacturer. At year end, he must determine how to account for the company's contingencies. His manager, Tom Pretti, objects to Johnson's proposal to recognize an expense and a liability for warranty service on units of a new product introduced in the fourth quarter. Pretti comments, There's no way we can estimate this warranty cost. We don't owe anyone anything until a product fails and it is returned. Let's report an expense if and when we do any warranty work.

Required: 

Prepare a one page memorandum for Johnson to send to Pretti defending his proposal. 

Reference no: EM13901410

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