Cooper Automotives offers customers purchasing its cars separately priced (extended) warranties. Cooper Automotive services these extended warranties. Its customers can receive no refunds for not using these warranties, and, of course, Cooper Automotive must honor these contracts – regardless of any future costs in doing so. It also “tracks” the profits and losses these types of warranties generate by car category—in order to help maintain a competitive price and costing structures. How should Cooper Automotive recognize the revenues and expenses of such extended warranties?