Dell 2010 Annual Report Download - page 92

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Table of Contents
DELL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 9 — 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 the 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 the 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 28, January 29, January 30,
2011 2010 2009
(in millions)
Warranty liability:
Warranty liability at beginning of period $ 912 $ 1,035 $ 929
Costs accrued for new warranty contracts and changes in estimates for pre-existing
warranties(a)(b) 1,046 987 1,180
Service obligations honored (1,063) (1,110) (1,074)
Warranty liability at end of period $ 895 $ 912 $ 1,035
Current portion $ 575 $ 593 $ 721
Non-current portion 320 319 314
Warranty liability at end of period $ 895 $ 912 $ 1,035
Fiscal Year Ended
January 28, January 29, January 30,
2011 2010 2009
(in millions)
Deferred extended warranty revenue:
Deferred extended warranty revenue at beginning of period $ 5,910 $ 5,587 $ 5,233
Revenue deferred for new extended warranties(b) 3,877 3,481 3,470
Revenue recognized (3,371) (3,158) (3,116)
Deferred extended warranty revenue at end of period $ 6,416 $ 5,910 $ 5,587
Current portion $ 2,959 $ 2,906 $ 2,601
Non-current portion 3,457 3,004 2,986
Deferred extended warranty revenue at end of period $ 6,416 $ 5,910 $ 5,587
(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.
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