Ford 2014 Annual Report Download - page 177
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FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
NOTE 27. COMMITMENTS AND CONTINGENCIES (Continued)
For the remaining matters, where our historical experience with similar matters is of more limited value
matters”), we evaluate the matters primarily based on the individual facts and circumstances. For
matters, we evaluate whether there is a reasonable possibility of a material loss in excess of any accrual that
can be estimated. Our estimate of reasonably possible loss in excess of our accruals for all material matters currently
reflects indirect tax and customs matters, for which we estimate the aggregate risk to be a range of up to about
$2.9 billion.
As noted, the litigation process is subject to many uncertainties, and the outcome of individual matters is not
predictable with assurance. Our assessments are based on our knowledge and experience, but the ultimate outcome of
any matter could require payment substantially in excess of the amount that we have accrued and/or disclosed.
Warranty and Field Service Actions
We accrue obligations for warranty costs and field service actions (i.e., safety recalls, emission recalls, and other
product campaigns) at the time of sale. We establish estimates for warranty and field service action obligations using a
patterned estimation model using historical information regarding the nature, frequency, and average cost of claims for
each vehicle line by model year. We reevaluate the adequacy of our accruals on a regular basis and any revisions to our
estimated obligation for warranties and field service actions are reported as Changes in accrual related to pre-existing
warranties in the table below.
Warranty and field service actions obligations accounted for in Other liabilities and deferred revenue for the years
ended December 31 were as follows (in millions):
2014 2013
Beginning balance $ 3,927 $ 3,656
Payments made during the period (2,850)(2,302)
Changes in accrual related to warranties issued during the period 2,108 2,025
Changes in accrual related to pre-existing warranties 1,746 625
Foreign currency translation and other (145)(77)
Ending balance $ 4,786 $ 3,927
Excluded from the table above are costs accrued for customer satisfaction actions.
FS-71