Accrued Liabilities

9 Months Ended

Sep. 30, 2014

4.	Accrued Liabilities

Accrued liabilities consist of (in millions):


	September 30, 2014		December 31, 2013
Accrued vendor costs	$	840	$	531
Customer prepayments and billings		765		673
Compensation		503		516
Warranty		267		228
Taxes (non-income)		181		188
Insurance		140		131
Fair value of derivative financial instruments		140		31
Accrued commissions		93		97
Interest		30		11
Other		351		357

Total	$	3,310	$	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		87
Amounts incurred		(50	)
Currency translation adjustments and other		2

Balance at September 30, 2014	$	267