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COMMITMENTS AND CONTINGENCIES | 6 Months Ended
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May 01, 2022
COMMITMENTS AND CONTINGENCIES |
COMMITMENTS AND CONTINGENCIES | (15) 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 $809 million and $681 million at May 1, 2022 and May 2, 2021, respectively. A reconciliation of the changes in the warranty liability and unearned premiums was as follows in millions of dollars:
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three Months Ended | ​ | Six Months Ended |
​ | ​ | May 1 | ​ | May 2 | ​ | May 1 | ​ | May 2 |
​ | ​ | 2022 | ​ | 2021 | ​ | 2022 | ​ | 2021 |
Beginning of period balance |  | $ | 2,064 |  | $ | 1,803 |  | $ | 2,086 |  | $ | 1,743 | ​
Payments | ​ | ​ | (224) | ​ |  | (202) | ​ | ​ | (417) | ​ |  | (417) | ​
Amortization of premiums received | ​ | ​ | (64) | ​ |  | (65) | ​ | ​ | (130) | ​ |  | (128) | ​
Accruals for warranties | ​ | ​ | 223 | ​ |  | 248 | ​ | ​ | 404 | ​ |  | 495 | ​
Premiums received | ​ | ​ | 91 | ​ |  | 90 | ​ | ​ | 174 | ​ |  | 163 | ​
Foreign exchange | ​ | ​ | 5 | ​ |  | 2 | ​ | ​ | (22) | ​ |  | 20 | ​
End of period balance | ​ | $ | 2,095 | ​ | $ | 1,876 | ​ | $ | 2,095 | ​ | $ | 1,876 | ​
​ At May 1, 2022, the Company had approximately $352 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 May 1, 2022, the Company had accrued losses of $4 million under these agreements. The maximum remaining term of the receivables guaranteed at May 1, 2022 was approximately six years. At May 1, 2022, the Company had commitments of $392 million for the construction and acquisition of property and equipment. Also, at May 1, 2022, the Company had restricted assets of $69 million, classified as Other assets. See Note 9 for additional restricted assets associated with borrowings related to securitizations. The Company also had other miscellaneous contingent liabilities totaling approximately $75 million at May 1, 2022. The accrued liability for these contingencies was not material at May 1, 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, 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 consolidated financial statements.

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