---
title: Assurance-Type Warranty
description: A basic warranty guaranteeing the product functions as intended, treated strictly as a cost accrual rather than a revenue deferral. It does not provid...
sidebar_position: 36
tags: ['asc-606', 'Revenue']
---

# Assurance-Type Warranty

## The ASC 606 Standard

A basic warranty guaranteeing the product functions as intended, treated strictly as a cost accrual rather than a revenue deferral. It does not provide an additional service to the customer.

## The Real-World Scenario

You sell a television with a standard 90-day guarantee that it will turn on and display a picture properly upon arrival.

## The Spreadsheet Breaking Point

Forgetting to manually book the associated warranty expense at the exact time of the sale misstates your monthly profitability.

## The Hidden Cost to the Bottom Line

Failing to accrue warranty costs makes the company appear more profitable upfront, leading to sudden margin collapses when repairs occur.

## How GAAPX Eliminates the Risk

Automatically books the precise estimated warranty expense simultaneously with the sale, protecting gross margins without delaying revenue.