question is related to warranty

Question

Our company(ie dealer not manufacture) sells the vehicles to the customer. And in certain vehicle
there is scheme of sale on warranty. The warranty is meet by our company but the warranty meet by our company is reimbuse by principal company as and when we incurred expenses. so in this matter how should we book expense and all.

Answer 1

I think this should be recorded as a current asset. What you incur is in turn receivable from the car manufacturer so it is not an expense for you.