Dell 2009 Annual Report Download - page 82

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Table of Contents
DELL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 7 — WARRANTY AND DEFERRED EXTENDED WARRANTY REVENUE
Dell records liabilities for its standard limited warranties at the time of sale for the estimated costs that may be incurred. The liability for
standard warranties is included in accrued and other current and other non-current liabilities on Dell's Consolidated Statements of
Financial Position. Revenue from the sale of extended warranties is recognized over the term of the contract or when the service is
completed, and the costs associated with these contracts are recognized as incurred. Deferred extended warranty revenue is included in
deferred services revenue on Dell's Consolidated Statements of Financial Position. Changes in Dell's liabilities for standard limited
warranties and deferred services revenue related to extended warranties are presented in the following tables:
Fiscal Year Ended
January 29, January 30, February 1,
2010 2009 2008
(in millions)
Warranty liability:
Warranty liability at beginning of period $ 1,035 $ 929 $ 958
Costs accrued for new warranty contracts and changes in estimates for pre-existing
warranties(a)(b) 987 1,180 1,176
Service obligations honored (1,110) (1,074) (1,205)
Warranty liability at end of period $ 912 $ 1,035 $ 929
Current portion $ 593 $ 721 $ 690
Non-current portion 319 314 239
Warranty liability at end of period $ 912 $ 1,035 $ 929
Fiscal Year Ended
January 29, January 30, February 1,
2010 2009 2008
(in millions)
Deferred extended warranty revenue:
Deferred extended warranty revenue at beginning of period $ 5,587 $ 5,233 $ 4,194
Revenue deferred for new extended warranties(b) 3,481 3,470 3,806
Revenue recognized (3,158) (3,116) (2,767)
Deferred extended warranty revenue at end of period $ 5,910 $ 5,587 $ 5,233
Current portion $ 2,906 $ 2,601 $ 2,459
Non-current portion 3,004 2,986 2,774
Deferred extended warranty revenue at end of period $ 5,910 $ 5,587 $ 5,233
(a) Changes in cost estimates related to pre-existing warranties are aggregated with accruals for new standard warranty contracts. Dell's warranty liability process does
not differentiate between estimates made for pre-existing warranties and new warranty obligations.
(b) Includes the impact of foreign currency exchange rate fluctuations. 78