Reference no: EM132490497

TTL sold 50,000 laser-projection, virtual keyboards to Mega Mart. Mega Mart paid TTL in cash up front. The keyboards were sold for $30 each, and include a one-year warranty. The warranty is to be serviced by TTL, and not Mega Mart. Considering that the product is relying on relatively new technology, TTL estimates that approximately 5% of all keyboards will require some work. Management has estimated that the average cost per warranty claim will be $15. No claims have been made during the current fiscal year.

• current assets of $2.5 million and current liabilities of $1.1 million.

Question 1: Would the warranty liability be claimed and recorded or not?

Question 2: Understand that the sale of the laser projection will increase current assets and that this is an assurance type warranty therefore it is recorded at the point of sale. Confused on whether the warranty liability will be claimed or not since its assurance type. Will it affect the current liabilities and why