Pleasant Co. manufactures specialty bike accessories. The company is known for p

Pleasant Co. manufactures specialty bike accessories. The company is known for product
quality, and it has offered one of the best warranties in the industry on its higher-priced
products—a lifetime guarantee, performing all the warranty work in its own shops. The warranty
on these products is included in the sales price.
Due to the recent introduction and growth in sales of some products targeted to the low-price
market, Pleasant is considering partnering with another company to do the warranty work on this
line of products, if customers purchase a service contract at the time of original product
purchase. Pleasant has called you to advise the company on the accounting for this new warranty
arrangement.
a. Identify the accounting literature that addresses the accounting for the type of separately
priced extended warranty that Pleasant is considering.
b. When are warranty contracts considered separately priced?
c. When shall a loss be recognized on an extended warranty?
Provide codification references for your responses (e.g. ASC 910-25-35-1)