Compute the amount of warranty expense for fiscal year

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Reference no: EM133061418

Question - Bombardier Inc. specializes in manufacturing transportation products (aircraft, railway equipment, snowmobiles, and watercraft). The company offers warranties on all of its products. Note 2 to Bombardier's financial statements for fiscal year 2018 stated the following:

Product warranties typically range from one to five years, except for aircraft structural and bogie warranties that extend up to 20 years.

Selected information from Bombardier's annual reports follows (amounts in millions of U.S. dollars):

 

2018

2017

2016

Revenues

16,993

18,572

18,117

Provision for product warranties at year-end

1,011

1,118

1,165

During fiscal year 2018, Bombardier paid $410 million to customers in exchange for returned products under the warranty.

Required -

1. Compute the amount of warranty expense for fiscal year 2018.

2. Prepare journal entries to record both the warranty expense for the year and the payments made under the warranty.

Reference no: EM133061418

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