Quarterly report pursuant to Section 13 or 15(d)

PRODUCT WARRANTY LIABILITY

v2.4.0.8
PRODUCT WARRANTY LIABILITY
 9 Months Ended
Sep. 28, 2014
Product Warranties Disclosures [Abstract]  
PRODUCT WARRANTY LIABILITY
NOTE 10. PRODUCT WARRANTY LIABILITY
 
We charge the estimated costs of warranty programs, other than product recalls, to income when the sale is recorded.  We use historical claims experience to develop the estimated liability.  We review product recall programs on a quarterly basis and, if necessary, record a liability when we commit to an action, or when they become probable and estimable, which is reflected in the provision for warranties issued line.  We also sell extended warranty coverage on several engines.  A tabular reconciliation of the product warranty liability, including the deferred revenue related to our extended warranty coverage and accrued recall programs was as follows:
 
 
 
Nine months ended
In millions 
 
September 28, 2014
 
September 29, 2013
Balance, beginning of year
 
$
1,129

 
$
1,088

Provision for warranties issued
 
307

 
317

Deferred revenue on extended warranty contracts sold
 
175

 
138

Payments
 
(313
)
 
(312
)
Amortization of deferred revenue on extended warranty contracts
 
(109
)
 
(84
)
Changes in estimates for pre-existing warranties
 
28

 
(26
)
Foreign currency translation
 
(4
)
 
(3
)
Balance, end of period
 
$
1,213

 
$
1,118


 
Warranty related deferred revenue, supplier recovery receivables and the long-term portion of the warranty liability on our September 28, 2014, balance sheet were as follows:
In millions
 
September 28, 2014
 
Balance Sheet Location
Deferred revenue related to extended coverage programs
 
 

 
 
Current portion
 
$
159

 
Deferred revenue
Long-term portion
 
401

 
Other liabilities and deferred revenue
Total
 
$
560

 
 
 
 
 
 
 
Receivables related to estimated supplier recoveries
 
 

 
 
Current portion
 
$
9

 
Trade and other receivables
Long-term portion
 
3

 
Other assets
Total
 
$
12

 
 
 
 
 
 
 
Long-term portion of warranty liability
 
$
302

 
Other liabilities and deferred revenue