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COMMITMENTS AND CONTINGENCIES | 12 Months Ended
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Oct. 30, 2022
COMMITMENTS AND CONTINGENCIES |
COMMITMENTS AND CONTINGENCIES | 20. COMMITMENTS AND CONTINGENCIES The company 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 determined by a review of five-year claims costs and current quality developments. The premiums for extended warranties are recognized in “Other income” in the statements of consolidated 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 $866 million and $774 million at October 30, 2022 and October 31, 2021, respectively. A reconciliation of the changes in the warranty liability and unearned premiums in millions of dollars follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Warranty Liability/ |
​ | ​ | Unearned Premiums |
​ |  | 2022 |  | 2021 |
Beginning of year balance |  | $ | 2,086 |  | $ | 1,743 |
Payments | ​ |  | (951) | ​ |  | (864) | ​
Amortization of premiums received | ​ |  | (289) | ​ |  | (227) | ​
Accruals for warranties | ​ |  | 1,094 | ​ |  | 1,071 | ​
Premiums received | ​ |  | 404 | ​ |  | 358 | ​
Foreign exchange | ​ |  | (51) | ​ |  | 5 | ​
End of year balance |  | $ | 2,293 |  | $ | 2,086 | ​
​ At October 30, 2022, the company had approximately $287 million of guarantees issued 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 October 30, 2022, the accrued losses under these agreements were not material. The maximum remaining term of the receivables guaranteed at October 30, 2022 was about eight years. At October 30, 2022, the company had commitments of approximately $418 million for the construction and acquisition of property and equipment. Also at October 30, 2022, the company had restricted assets of $221 million, classified as “Other assets.” The company also had other miscellaneous contingent liabilities and guarantees totaling approximately $110 million at October 30, 2022. The accrued liability for these contingencies was not material at October 30, 2022. The company has commitments to extend credit to customers through lines of credit and other pre-approved credit arrangements. The amount of unused commitments to extend credit to John Deere dealers was approximately $10 billion at October 30, 2022. The amount of unused commitments to extend credit to retail customers was approximately $32 billion at October 30, 2022, primarily related to revolving charge accounts. A significant portion of these commitments is not expected to be fully drawn upon; therefore, the total commitment amounts likely do not represent a future cash requirement. The company generally has the right to unconditionally cancel, alter, or amend the terms of these commitments at any time. The company has a reserve for credit losses of $3 million on unfunded commitments that are not unconditionally cancellable at October 30, 2022. 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, trademark, and antitrust 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.

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