Key Points to Know When Making Product Warranty Provisions

The provision for warranty of products, goods, services, and construction projects by enterprises is guided by Circular 48/2019/TT-BTC as follows:

Illustration (source: internet)

- Subjects and conditions for provisioning: These are products, goods, services, and construction projects undertaken by the enterprise that have been sold, provided, or handed over to the buyer and are still under warranty. The enterprise still has the obligation to continue repairing, finishing, and warranting as per the contract or commitment to the customer.- Regarding the provisioning level:

- The enterprise estimates the potential loss to provision for the warranty of products, goods, services, and construction projects sold and services provided in the year and makes provisions for each type of product, goods, services, construction projects with a warranty commitment.- The total provisioning level for the warranty of products, goods, services, and construction projects as committed to customers but not exceeding 5% of total annual revenue for products, goods, and services and not exceeding 5% of the contract value for construction projects.

- After provisioning for each type of product, goods, services, construction projects, the enterprise consolidates all provisions into a detailed schedule. The detailed schedule is the basis for accounting into the enterprise’s expenses for the period.

See the full regulations in Circular 48/2019/TT-BTC effective from October 10, 2019.

Thu Ba

>> CLICK HERE TO READ THIS ARTICLE IN VIETNAMESE