Writing Assignment #2
a) FASB ASC 605-20-25 deal with warranties and specifically separately priced warranties
b) If a customer has the option to purchase a distinct separate warranty from the one included in the purchase price of the products. And that separate warranty has its own value distinct from the purchase price of the products. Then the business engages in a contract where it promises to provide the service to the customer in addition to the product. This causes the company to account for the warranty as a separate performance obligation in accordance with FASB ASC 606-10-25-14 through 606-10-25-22. As stated in FASB ASC 605-20-20.
c) All the costs that are directly related to the acquisition and the incremental costs are deferred and expenses in proportion of the revenue received. All other expenses are charged as incurred as stated by FASB ASC 605-20-25-4