amtrust financial services inc nasdaq afsi is a multinational property
AmTrust Financial Services, Inc., (NASDAQ: AFSI) is a multinational property and casualty insurance company headquartered in New York. In 2017, the company had to restate three years of financial statements due to several accounting errors, the key one being how it accounted for extendedwarranties. Am Trust provides extended-service plans (ESP) for automobiles and other consumer goods. Acustomer purchasing an ESP will pay for the plan at the point of automobile or consumer goodpurchase and then the customer will be protected from unexpected repairs for the life of thecontract. These ESP plans can, and frequently do, span multiple years. An ESP plan is a warranty(insurance coverage) sold by AmTrust, even though the company itself does not sell the automobileor other product that the ESP covers. 1.During 2012 - 2015, how did AmTrust erroneously account for the sale of a four-year ESP for cash? 2. If Am Trust sold a four-year ESP and received cash for it at the time of sale, how should Am Trust have accounted for the sale of that ESP? 3. Assume that Am Trust sold a four-year $1,000 ESP at the beginning of 2012 for cash and recognized the revenue immediately. What would the impact on the balance sheet and income statements for each of the four years from 2012 - 2015? Be specific. 3. Assume that Am Trust sold a four-year $1,000 ESP at the beginning of 2012 for cash and recognized the revenue immediately. What would the impact on the balance sheet and income statements for each of the four years from 2012-2015? Be specific.
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