Kodak 2012 Annual Report Download - page 86

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Table of Contents
Additionally, the fair value of the indemnifications that Kodak issued during the year ended December 31, 2012 was not material to Kodak’s
financial position, results of operations or cash flows.
Warranty Costs
Kodak has warranty obligations in connection with the sale of its products and equipment. The original warranty period is generally one year or
less. The costs incurred to provide for these warranty obligations are estimated and recorded as an accrued liability at the time of sale. Kodak
estimates its warranty cost at the point of sale for a given product based on historical failure rates and related costs to repair. The change in
Kodak’s accrued warranty obligations balance, which is reflected in Other current liabilities in the accompanying Consolidated Statement of
Financial Position, was as follows:
Kodak also offers its customers extended warranty arrangements that are generally one year, but may range from three months to three years
after the original warranty period. Kodak provides repair services and routine maintenance under these arrangements. Kodak has not separated
the extended warranty revenues and costs from the routine maintenance service revenues and costs, as it is not practicable to do so. Therefore,
these revenues and costs have been aggregated in the discussion that follows. The change in Kodak’s deferred revenue balance in relation to
these extended warranty and maintenance arrangements, which is reflected in Other current liabilities in the accompanying Consolidated
Statement of Financial Position, was as follows:
Costs incurred under these extended warranty and maintenance arrangements for the years ended December 31, 2012 and 2011 amounted to
$280 million and $305 million, respectively.
NOTE 15: FINANCIAL INSTRUMENTS
The following table presents the carrying amounts, estimated fair values, and location in the Consolidated Statement of Financial Position for
Kodak’s financial instruments:
82
(in millions)
Accrued warranty obligations as of December 31, 2010
$
43
Actual warranty experience during 2011
(92
)
2011 warranty provisions
95
Accrued warranty obligations as of December 31, 2011
$
46
Actual warranty experience during 2012
(72
)
2012 warranty provisions
60
Accrued warranty obligations as of December 31, 2012
$
34
(in millions)
Deferred revenue as of December 31, 2010
$
130
New extended warranty and maintenance arrangements in 2011
428
Recognition of extended warranty and maintenance arrangement revenue in 2011
(438
)
Deferred revenue as of December 31, 2011
$
120
New extended warranty and maintenance arrangements in 2012
384
Recognition of extended warranty and maintenance arrangement revenue in 2012
(397
)
Deferred revenue as of December 31, 2012
$
107