22. 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. The unamortized extended warranty premiums (deferred revenue) included in the following table totaled $506 million and $461 million at October 28, 2018 and October 29, 2017, respectively.

A reconciliation of the changes in the warranty liability and unearned premiums in millions of dollars follows:


	Warranty Liability/
	Unearned Premiums
	2018		2017
Beginning of year balance	$	1,468	$	1,226
Payments		(907)		(743)
Amortization of premiums received		(217)		(207)
Accruals for warranties		978		959
Premiums received		270		224
Acquisition*		80
Foreign exchange		(20)		9
End of year balance	$	1,652	$	1,468

* See Note 4.

At October 28, 2018, the company had approximately $357 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 and Wirtgen equipment. The increase from October 29, 2017 primarily relates to the Wirtgen acquisition. The company may recover a portion of any required payments incurred under these agreements from repossession of the equipment collateralizing the receivables. At October 28, 2018, the company recorded a liability of approximately $14 million under these agreements. The maximum remaining term of the receivables guaranteed at October 28, 2018 was approximately seven years.

At October 28, 2018, the company had commitments of approximately $289 million for the construction and acquisition of property and equipment. Also at October 28, 2018, the company had restricted assets of $111 million, classified as “Other Assets”. See Note 13 for additional restricted assets associated with borrowings related to securitizations.

The company also had other miscellaneous contingent liabilities totaling approximately $155 million at October 28, 2018. The accrued liability for these contingencies was approximately $20 million at October 28, 2018.

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, employment, patent, and trademark matters. The company believes the reasonably possible range of losses for these unresolved legal actions would not have a material effect on its financial statements.