We are not talking about revenue from an extended warranty purchase, but how warranty liabilities are accounted for. The tweet I was responding to suggested that revenue from the sale of a mattress was perhaps not recognized until after the warranty period. That is false. The revenue from a mattress sale is recognized when the mattress has been delivered and it has been paid for. So there isn’t a question on the revenue recognition side of things. Besides, the assertion was that this question of revenue recognition was still hanging...YET they supposedly had the audit completed. Those two things are inconsistent.
As to the question of warranty liabilities on a mattress sale, it is booked on the balance sheet as a “warranty liability” and would be some fraction of the mattress cost based on historical warranty claims.
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