Refined China accounting treatment for assurance warranty

In brief

  • China has lately issued a new accounting guideline, i.e. CAS Interpretation No. 18, to clarify the accounting treatment for assurance-type product sales warranty, which refer to warranty services for meeting the statutory product quality requirements – representing another important step in China’s ongoing convergence with International Financial Reporting Standards (IFRS).
  • The interpretation is particularly relevant for sales of durable goods, machinery and equipment, consumer electronics, automobiles, etc. This article explores the requirements and implications.

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