Accrued Liabilities

9 Months Ended

Sep. 30, 2016

3. Accrued Liabilities

Accrued liabilities consist of (in millions):


	September 30, 2016		December 31, 2015
Customer prepayments and billings	$	306	$	426
Vendor costs		280		449
Compensation		195		241
Warranty		190		244
Taxes (non-income)		148		175
Insurance		94		113
Commissions		57		73
Fair value of derivative financial instruments		43		261
Interest		29		8
Other		286		294

Total	$	1,628	$	2,284

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”. 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, 2015	$	244

Net provisions for warranties issued during the year		39
Amounts incurred		(94	)
Currency translation adjustments and other		1

Balance at September 30, 2016	$	190