Final answer:
The liability for the warranty should be reported as part current and part long-term, reflecting obligations within and beyond the one-year operating cycle.
Step-by-step explanation:
In regards to whether any liability for the warranty should be reported as current or long-term, it on the one-year operating cycle and the three-year warranty policy. Given that a corporation has a one-year operating cycle and guarantees new products against defects for three years, the accounting treatment for warranty liabilities should be split. The portion of the warranty liability that is expected to be fulfilled within the corporation's one-year operating cycle should be classified as a current liability. Since the warranty extends beyond one year, the remaining portion of warranty costs that are anticipated to occur after the one-year cycle should be reported as long-term liabilities.
This segmentation between current and long-term reflects both the immediate obligation that is likely to arise within the next twelve months and the deferred obligation that is anticipated to occur thereafter. It ensures that the financial statements present a true and fair view of the corporation’s financial position, in line with proper accounting standards.
Therefore, the correct answer to the student's question is option 'c' - the liability for the warranty should be reported as part current and part long-term.