BC368 When an entity sells a product (whether that product is a good or service) to a customer, the entity may also provide the customer with a warranty on that product. The warranty might be described as, for example, a manufacturer's warranty, a standard warranty or an extended warranty. The boards decided to provide specific requirements for applying the revenue recognition model to warranties, because many contracts with customers for the sale of products include a warranty and the nature of that warranty may vary across products, entities and jurisdictions.
BC369 In the Discussion Paper, the boards proposed accounting for all warranties consistently because a unifying feature of all warranties is that an entity promises to stand ready to replace or repair the product in accordance with the terms and conditions of the warranty. The Discussion Paper proposed that a promise to stand ready would provide a customer with a service of warranty coverage, which would hav
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