The board is also concerned with the frequent variances in the amount of warranty expenses that were initially recognised compared to the actual cost of the warranty the company paid/incurred to fix/replace the faulty products. Therefore at the most recent board meeting it was agreed to stop recognising the warranty expenses before the warranty cost is actually incurred. The directors are wandering why we should complicate a very simple way of calculating warranty expenses – why not “stick with” recognising the expense when we pay for it. This way we won’t have to deal with all these variances. What do you think we should do and why?
I need around 500 words