Volt Electronics sells equipment that includes a three-year warranty. Repairs under the warranty are performed by an independent service company under a contract with Volt. Based on prior experience, warranty costs are estimated to be $25 per item sold. Volt should recognize these warranty costs:a. When the equipment is sold. b. When the repairs are performed. c. Evenly over the life of the warranty. d. When payments are made to the service firm.

a. When the equipment is sold.

Explanation:

As we know that

When someone sells or purchase a product, the services are attached to the product which is passed from the buyer to the seller that can be in terms of warranty i.e after-sales services, etc

So according to the given situation, the estimation of the warranty cost is $25 per time sold so the warranty cost should be recognized when the equipment is sold as it is attached to the product

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