Warranty Reserve and Accrual for Loss Contracts Related to Service

12 Months Ended

Dec. 31, 2016

Warranty Reserve and Accrual for Loss Contracts Related to Service

Warranty Reserve and Accrual for Loss Contracts Related to Service

11.  Warranty Reserve and Accrual for Loss Contracts Related to Service

The following table summarizes product warranty activity recorded during the years ended December 31, 2016 and 2015 (in thousands):

	December 31, 2016		December 31, 2015
Beginning balance - January 1	$	406	$	1,311
Additions for current period deliveries		42		230
Reductions for payments made		(263)		(1,135)
Ending balance - December 31	$	185	$	406

Management has projected estimated service costs related to GenCare extended maintenance contracts and determined that certain loss contracts exist. A variety of assumptions are included in the estimates of future service costs, including the life of parts, failure rates of parts, and future costs of parts and labor. As a result, the Company has an accrual for loss contracts related to service of $0.8 million and $10.1 million, as of December 31, 2016 and 2015, respectively. During the year ended December 31, 2016, the Company renegotiated one of these service contracts.  As a result, the projected costs over the remaining life of the amended contract were estimated to be reduced and the Company recognized a gain within cost of revenue where the original charge was recorded.

The following table summarizes activity related to the accrual for loss contracts related to service during the years ended December 31, 2016 and 2015 (in thousands):

	December 31, 2016		December 31, 2015
Beginning balance - January 1	$	10,050	$	—
Provision		(1,071)		10,050
Reductions for losses realized		(8,227)		—
Ending balance - December 31	$	752	$	10,050