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Hi,
Can you please explain th answer to the his question,
Surely if this is 5% of the sales it is classified as possible /remote?
Why would no.1 statement be to create a provision?
Please advise.In the past 5% of sales have resulted in warranty claims.
It is virtually certain therefore that some of the sales this year will result in warranty claims – it would be a miracle if there were no claims this year.(The 5% would only be relevant in deciding how much the claims are likely to amount to – but there has to be a provision of some amount because, again, there are virtually certain to be some claims).
Ok yes so there has always been warranty claims regardless of the percentage- it’s the likely hood in question! Silly me!
Thank you John. 🙂
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