General Motors Corporation (GM) disclosed estimated product warranty payable for comparative years as follows: Presume that GM’s sales were $135,592 million in Year 2 and that the total paid on...

General Motors Corporation (GM) disclosed estimated product warranty payable for comparative years as follows:

Presume that GM’s sales were $135,592 million in Year 2 and that the total paid on warranty claims during Year 2 was $3,000 million.

a. Why are short- and long-term estimated warranty liabilities separately disclosed?

b. Provide the journal entry for the Year 2 product warranty expense.

c. What two conditions must be met in order for a product warranty liability to be reported in the financial statements?