Revenue and Inventories

Question 1

How should inventory be measured?

Answer 1

At the lower of cost & NRV

Question 2

How should you treat additional warranties that can be purchased in addition to the product?

Answer 2

As a separate performance obligation. revenue should be recognised when that obligation takes place.

E.g. if a product is sold with an additional warranty that covers the customer from 1 year after purchase, then revenue on that warranty should be recognised one year after purchase & spread over length of warranty