Accountants :help:

[Pig]

Are there any accountants who would be able to help.

 

I have an report hand in tommorrow for uni.

 

here is an example of 1 of the 6 questions:

 

wrecks-you-like sells second hand cars which it buys at the local car auction. It offers its customers a six month warrenty covering repairs to the vehicles after purchase as part of the agreed selling price of the vehicle.

 

This is what im asked (same for all six):

Does the situation indicate the existence of an asset or a liability?

Should the identified asset or liability be recognised in the financial statement of the client concernet?

 

 

Please , i will be forever grateful!