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COMMITMENTS AND CONTINGENCIES | 3 Months Ended
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Jan. 31, 2015
COMMITMENTS AND CONTINGENCIES |
COMMITMENTS AND CONTINGENCIES | (14) Commitments and contingencies: The Company generally determines its total warranty liability by applying historical claims rate experience to the estimated amount of equipment that has been sold and is still under warranty based on dealer inventories and retail sales. The historical claims rate is primarily determined by a review of five-year claims costs and current quality developments. The premiums for extended warranties are primarily recognized in income in proportion to the costs expected to be incurred over the contract period. These unamortized extended warranty premiums (deferred revenue) included in the following table totaled $422 million and $360 million at January 31, 2015 and 2014, respectively. A reconciliation of the changes in the warranty liability and unearned premiums in millions of dollars follows:
|  | Three Months Ended January 31 |
|  | 2015 |  | 2014 |
Beginning of period balance |  | $ | 1,234 |  |  | $ | 1,164 |  |
Payments |  | (178 | ) |  | (189 | ) |
Amortization of premiums received |  | (41 | ) |  | (28 | ) |
Accruals for warranties |  | 181 |  |  | 185 |  |
Premiums received |  | 45 |  |  | 46 |  |
Foreign exchange |  | (24 | ) |  | (6 | ) |
End of period balance |  | $ | 1,217 |  |  | $ | 1,172 |  |
At January 31, 2015, the Company had approximately $220 million of guarantees issued primarily to banks outside the U.S. and Canada related to third-party receivables for the retail financing of John Deere equipment. The Company may recover a portion of any required payments incurred under these agreements from repossession of the equipment collateralizing the receivables. At January 31, 2015, the Company had accrued losses of approximately $7 million under these agreements. The maximum remaining term of the receivables guaranteed at January 31, 2015 was approximately five years. At January 31, 2015, the Company had commitments of approximately $236 million for the construction and acquisition of property and equipment. Also, at January 31, 2015, the Company had restricted assets of $115 million, primarily as collateral for borrowings and restricted other assets. See Note 11 for additional restricted assets associated with borrowings related to securitizations. The Company also had other miscellaneous contingent liabilities totaling approximately $40 million at January 31, 2015, for which it believes the probability for payment is substantially remote. The accrued liability for these contingencies was not material at January 31, 2015. The Company is subject to various unresolved legal actions which arise in the normal course of its business, the most prevalent of which relate to product liability (including asbestos related liability), retail credit, software licensing, patent, trademark and environmental matters. The Company believes the reasonably possible range of losses for these unresolved legal actions in addition to the amounts accrued would not have a material effect on its consolidated financial statements.

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