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Extra services are included in warranties that go beyond the assurance-type guarantee. Because it is not included in the product's purchase price, this assurance is referred to as a service-type warranty. As a result, it is recorded as a performance obligation individually.

At the price of $1,000,000 Talarczyk sold super-spreaders that means,

Sales Revenue will be $1,000,000.

Talarczyk extends the assurance warranties and the cost estimate for this is $40,000 that means,

Warranty Expense will be $40,000.

Extended warranties were also sold by Talarczyk which are service-type warranties for $12,000 that means,

Unearned Warranty Revenue will be $12,000.

Warranty Liability will be $40,000

Talarczyk receives $1,000,000 as total price by selling super-spreaders and also receive $12,000 by selling extended warranties which is also an unearned warranty revenue, that means,

$$\begin{gathered} \mathrm{Cash}=\mathrm{Total}\mathrm{price}+\mathrm{Unearned}\mathrm{warranty}\mathrm{revenue} \\ =\$1,000,000+\$12,000 \\ =\$1,012,000 \end{gathered}$$