Accrued Liabilities

6 Months Ended

Jun. 30, 2014

4.	Accrued Liabilities

Accrued liabilities consist of (in millions):


	June 30, 2014		December 31, 2013
Customer prepayments and billings	$	808	$	673
Accrued vendor costs		538		531
Compensation		419		516
Warranty		267		228
Taxes (non-income)		176		188
Insurance		132		131
Accrued commissions		96		97
Fair value of derivative financial instruments		25		31
Interest		11		11
Other		385		357

Total	$	2,857	$	2,763

Service and Product Warranties

The Company provides service and warranty policies on certain of its products. The Company accrues liabilities under service and warranty policies based upon specific claims and a review of historical warranty and service claim experience in accordance with Accounting Standards Codification (“ASC”) Topic 450 “Contingencies” (“ASC Topic 450”). Adjustments are made to accruals as claim data and historical experience change. In addition, the Company incurs discretionary costs to service its products in connection with product performance issues and accrues for them when they are encountered.

The changes in the carrying amount of service and product warranties are as follows (in millions):


Balance at December 31, 2013	$	228

Net provisions for warranties issued during the year		61
Amounts incurred		(26	)
Currency translation adjustments and other		4

Balance at June 30, 2014	$	267