Annual report pursuant to Section 13 and 15(d)

PRODUCT WARRANTY LIABILITY

v2.4.0.8
PRODUCT WARRANTY LIABILITY
 12 Months Ended
Dec. 31, 2013
Product Warranties Disclosures [Abstract]  
PRODUCT WARRANTY LIABILITY
NOTE 11. PRODUCT WARRANTY LIABILITY
We charge the estimated costs of warranty programs, other than product recalls, to income at the time products are shipped to customers.  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:
 
 
December 31,
In millions 
 
2013
 
2012
Balance, beginning of year
 
$
1,088

 
$
1,014

Provision for warranties issued
 
431

 
415

Deferred revenue on extended warranty contracts sold
 
189

 
210

Payments
 
(427
)
 
(416
)
Amortization of deferred revenue on extended warranty contracts
 
(115
)
 
(103
)
Changes in estimates for pre-existing warranties
 
(35
)
 
(33
)
Foreign currency translation
 
(2
)
 
1

Balance, end of year
 
$
1,129

 
$
1,088


Warranty related deferred revenue, supplier recovery receivables and the long-term portion of the warranty liability on our Consolidated Balance Sheets were as follows:
 
 
December 31,
 
 
In millions
 
2013
 
2012
 
Balance Sheet Location
Deferred revenue related to extended coverage programs
 
 
 
 
 
 
Current portion
 
$
145

 
$
111

 
Deferred revenue
Long-term portion
 
349

 
309

 
Other liabilities and deferred revenue
Total
 
$
494

 
$
420

 
 
Receivables related to estimated supplier recoveries
 
 
 
 
 
 
Current portion
 
$
5

 
$
7

 
Trade and other receivables
Long-term portion
 
5

 
6

 
Other assets
Total
 
$
10

 
$
13

 
 
Long-term portion of warranty liability
 
$
275

 
$
282

 
Other liabilities and deferred revenue