CERTYNEX IFRS ACADEMY

Électroménager Saule sells washing machines with the 2-year warranty required by the law of its country, which cannot be purchased separately. Saule also undertakes to bear the cost of shipping any defective appliance back to its workshop during that period. No other service is promised. Its analyst concludes that the warranty and the shipping promise only provide assurance of compliance. Which treatment follows?

The return-shipping promise is a separate performance obligation, since it is a logistics service provided to the customer.

The warranty becomes a performance obligation as soon as its length exceeds 1 year, whatever the nature of the tasks promised.

The legal nature of the warranty requires it to be excluded from any accounting, IAS 37 included.

The warranty, return shipping included, is not a performance obligation and is accounted for under IAS 37.