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hello in this lecture we will define the term warranty according to fundamental accounting principles wild 22nd edition via definition of warranty is agreement that obligates the seller to correct or replace a product or service when it fails to perform properly within a specific time period if we are the seller of a product and we provide a warranty that means that we are obligated to fix any problems with that product within that warranties time period the question then is whether or not theres going to be a problem that will need to be fixed in the future the assumption is that not all the products we make will have a problem that needs to be fixed but that there will be some that will so for example if we produce and sell forklifts here and we give a warranty on those forklifts for a specific time period into the future the question is how much of those warranties are going to be actuated and have to be paid out in the future in accordance with the matching principle what we woul
