Archived Copies of Warranty Week

December 2002 to Today

Apple & Tesla Warranty Accounting: The third quarter numbers are coming in fast and furious now, and some investors and stock analysts are treating the warranty expense data as a leading indicator of a company's financial health. But there are limits to how quickly some bad numbers can turn into a trend or a scandal.
November 7, 2019
Truck Extended Warranty Sales: New accounting rules require companies to disclose their "service-type warranty" sales. Last year, five of the top U.S.-based truck manufacturers sold more than $1.2 billion worth of extended warranties, a stunning 18% gain over 2017.
August 29, 2019
ASC 606 Causes Warranty Accounting Changes: Though it's mainly about revenue recognition, ASC 606 also forces manufacturers and retailers to separate product warranty from extended warranty, and account for each differently. But to get there, the FASB confuses the issue with new terminology and vague concepts.
December 20, 2018
Nine-Month Warranty Expense Data: While vehicle and building trade warranty expenses continue more or less unchanged, high-tech electronic warranty spending is still falling. And a new accounting rule is forcing companies to separate break/fix warranties from sales returns, reducing some expense totals significantly.
December 13, 2018
New Home Warranty Expense Rates: Some industry metrics are at their highest level in more than a decade, and one set a new all-time high. And none of the builders are using the sleight-of-hand accounting tricks they employed before the last recession. So is there any substance to these talks of an imminent industry downturn?
November 29, 2018
Top 100 Warranty Providers of 2017: While total claims and accruals fell last year, some companies saw their warranty costs soar. By comparing each company to itself over time, we can spot the most and least improved warranty providers. And we can also spot the accounting eccentricities of those few that act like nobody's watching.
March 15, 2018
HP's Warranty Accounting: Before the split, HP's warranty expenses were declining for multiple years. After the split, the laptop and printer company has much higher warranty expenses than the server and storage company.
February 18, 2016
Telecom Equipment Warranty Report: As the old guard making landline phone equipment declines, the makers of data communication equipment and smartphones are accounting for an increasing share of the industry's warranty expenses. Still, there's been an overall decline in both the expense totals and the expense rates.
May 22, 2014
Warranty Accounting Standards: Out with the old and in with the new. FIN 45 for product warranties and TB 90-1 for extended warranties have been replaced by the Accounting Standards Codification, a vast yet easy-to-navigate unification of all GAAP standards.
February 7, 2013
Addressing Common Business Challenges Associated with Manufacturer Warranties: Proper estimation and accounting of warranty costs isn't easy, but the benefit of doing so is enormous. Actuaries in pursuit of precise and accurate forecasts can employ techniques similar to those used in estimating the financial impact of insurance coverage, and can help a company avoid restatements and other adverse impacts that could threaten its profitability.
January 31, 2013
Warranty Adjustments, Part 3: While all exporters must deal with foreign exchange fluctuations, some companies seem to be affected more than others. In fact, when compared to other warranty metrics, some of these fluctuations are huge. Is that caused by the unique nature of their businesses, or is it a sign of sloppy warranty accounting?
November 10, 2011
Warranty in Financial Statements: Because warranty disclosures began appearing in annual reports less than seven years ago, it takes a bit of skill to hunt down the right data and turn it into meaningful percentages and ratios. So until the procedures are old enough to make it into the accounting textbooks, here's a step-by-step guide to how it's done, using one company's most recent disclosures as an example.
July 30, 2009
Warranty Management: Value and price are affected by product quality, which can be measured by fluctuations in warranty cost. But warranty is too often treated as merely a cost that must be reduced, without heeding its link to quality, price, and ultimately profits. And warranty is very different from accounting in that a big part of the job is using probability functions to predict the future.
October 16, 2008
Green Warranties, Part Four: Solar cell manufacturers betray their youth and inexperience when it comes to warranty accounting. Very long warranties, new technology and rapidly increasing sales don't make their jobs any easier.
June 5, 2008
Ford's Warranty Costs: Figures presented at the Warranty Chain Management Conference last week showed a massive drop in the automaker's warranty expenses. But that had much to do with the accounting for the soon-to-be-sold Jaguar and Land Rover divisions. Still, even after adjusting year-ago figures to account for that impending sale, Ford's warranty costs are down significantly.
March 12, 2008
Dell's Warranty Accounting: While it came up short in terms of scandal and financial impact, Dell's accounting investigation did produce one benefit. At long last, the company separated its basic and extended warranty programs. And it turns out that extended warranty was even bigger than we thought.
November 7, 2007
Ten Worldwide Warranty Providers: It's holiday time in the U.S. this week, so we're taking the opportunity to present warranty data for ten global brands based in other countries. Despite the currency and accounting differences, many pay warranty claims at rates close to those turned in by their U.S.-based peers.
July 5, 2007
Dell's Warranty Accounting: Dell is now seriously late with its quarterly financial reports because of investigations some say were prompted by its peculiar warranty accounting methods. Meanwhile, Apple's seems to have turned a corner regarding its recent iPod warranty problems.
January 9, 2007
Automotive Warranty: The Big Three feel the bite of increased warranty costs in the first quarter just as sales begin to fall. But how can companies be compared over time if their accounting standards and even their currencies are different?
May 24, 2005