liabilities characteristics

Estimated liabilities have two basic characteristics: the liability is known to exist, but the precise dollar amount cannot be determined until a later date. For instance, the automobiles sold by most automakers are accompanied by a warranty obligating the automaker to replace defective parts for a period of several years. As each car is sold, the automaker incurs a liability to perform any work which may be required under the warranty. The dollar amount of this liability, however, can only be estimated