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A warranty is a separate performance obligation if the warranty can be purchased separately.

What implementation issues surround accounting for warranties? Here are a few questions to ask yourself to determine how to minimize matters for this area of implementation:

  • Who in the organization will evaluate the contracts to determine what warranties need to be separate individual performance obligations?
  • Who will assign a transaction price to the warranty?
  • What method will be used to calculate a transaction price for the warranty?
  • What system changes need to be made in order to comply with accounting for a warranty as a separate performance obligation?
  • Do any changes need to be made in internal controls to properly account for warranties?

KatzAbosch has individuals experienced in contractor issues and trained in process improvement using lean six sigma principles that can help you through this transition. If you have any questions about this information please contact your KatzAbosch representative; or contact us by clicking here.

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