Accrued Liabilities

6 Months Ended

Jun. 30, 2017

3. Accrued Liabilities

Accrued liabilities consist of (in millions):


	June 30,		December 31,
	2017		2016
Compensation	$	237	$	181
Customer prepayments and billings		236		222
Vendor costs		221		235
Warranty		161		172
Taxes (non-income)		142		176
Insurance		92		103
Commissions		55		57
Fair value of derivative financial instruments		20		66
Interest		7		8
Other		318		348

Total	$	1,489	$	1,568

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, 2016	$	172

Net provisions for warranties issued during the year		24
Amounts incurred		(42	)
Currency translation adjustments and other		7

Balance at June 30, 2017	$	161