VirTra Inc (VTSI)

[imawswami]

Hey Teeroy, glad to hear from you.

Let's ask a question: Is an extended warranty recorded as income or as revenue?

If an Extended warranty is immediately accounted as a source of income, then in theory, there could be no matching future costs associated with it (e.g. a customer in the future needs repairs on this IVR, thus incurring a cost to Virtra). Income is final, not fluid.

But if the extended warranty is treated as Revenue -because a future claim or cost may need to be applied against it, then we would be able to account for future costs of goods on such a service, yes?

In this simple accounting example, revenue recognition is recorded on the second line of the income statement.

'Other Revenue' covers the sale of extended warranty. As proof this is correct, the third line reads....

Cost of sales and SERVICES.

Thus, any service calls or other costs pertaining to issuing an extended warranty would be recorded on this line.

Teeroy, let me ask you, what services is Virtra selling, that they would need to record 'Cost of Goods and Services Sold' against, besides maybe warranties?

Anyway, that's the way am accounting for Virtra's extended warranties -in my mind. Would gladly read and learn from your take on things, especially since you have been reading VTSI reports far longer than i....

Nite now.