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Bombardier Inc. specializes in manufacturing transportation products (aircraft, railway equipment, snowmobiles, and watercraft). The company offers warranties on all of its products. Note 2 to Bombardiers financial statements for fiscal year 2018 stated the following: Product warranties typically range from one to five years, except for aircraft structural and bogie warranties that extend up to 20 years. Selected information from Bombardiers annual reports follows (amounts in millions of U.S. dollars): 2018 2017 2016 Revenues 17,268 18,847 18,392 Provision for product warranties at year-end 1,066 1,173 1,220 During fiscal year 2018, Bombardier paid $465 million to customers in exchange for returned products under the warranty. Required: 1. Compute the amount of warranty expense for fiscal year 2018. (Enter your answer in millions of dollars.) 2. Prepare journal entries to record both the warranty expense for the year and the payments made under the warranty. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions of dollars.) 3-a. Compute the ratio of the warranty liability to revenues for the three years. (Round percentage answers to 2 decimal places (i.e., 0.1243 should be entered as 12.43).) 3-b. Has the ratio increased or decreased during the three-year period? 4. Based on the limited information available about the warranty expense and payments in 2018, should Bombardier increase the balance of the warranty liability in future years? multiple choice Yes No

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