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when you look into account for a warranty thats part of a contract of sale to a customer its basically two types of warranties either an assurance warranty or a service warranty now a service one is when you have the option to buy it separately and because of that its a distinct performance obligation and so therefore as we remember you allocate distinct poetess you allocate a transaction price to the distinct performance obligation waivers with an assurance warranty just a cost its potential cost and so you just provide for it according to is 37 7 like an example so youve got a one-year standard warranty for three-plus you can buy an additional 2 year warranty for 1,000 hopefully you can see that thats standard warranty its just an assurance warranty and so you just provide for it debit expense credit provision for the amount that you think it would cost you where is the 2-year one well thats a service warranty thats a distinct performance obligation and so you bring in that
