NOTE E - Product Support Liabilities

Product support liabilities are estimated future payments related to product warranties, optional extended warranties and repair and maintenance (R&M) contracts. The Company generally offers one year warranties covering most of its vehicles and related aftermarket parts. For vehicles equipped with engines manufactured by PACCAR, the Company generally offers two year warranties on the engine. Specific terms and conditions vary depending on the product and the country of sale. Optional extended warranty and R&M contracts can be purchased for periods which generally range up to five years. Warranty expenses and reserves are estimated and recorded at the time products or contracts are sold based on historical data regarding the source, frequency and cost of claims, net of any recoveries. The Company periodically assesses the adequacy of its recorded liabilities and adjusts them as appropriate to reflect actual experience. Revenue from extended warranty and R&M contracts is deferred and recognized to income generally on a straight-line basis over the contract period. Warranty and R&M costs on these contracts are recognized as incurred.

Changes in product support liabilities are summarized as follows:


	2014			2013
Balance at January 1	$	630.5		$	540.7
Cost accruals and revenue deferrals		322.2			224.7
Payments and revenue recognized		(228.9	)		(196.7	)
Currency translation		2.4			(9.1	)

Balance at June 30	$	726.2		$	559.6

In prior periods, cost accruals and revenue deferrals for the R&M contracts were netted against payments and revenue recognized instead of showing these amounts gross. The netting of these amounts affected only the disclosure in Note E; there was no effect on the Consolidated Statements of Comprehensive Income, the Consolidated Balance Sheets or the Condensed Consolidated Statements of Cash Flows. The table below presents “Cost accruals and revenue deferrals” and “Payments and revenue recognized” as previously reported in Note E and as revised:


	Three Months Ended March 31, 2014						Three Months Ended March 31, 2013						Six Months Ended June 30, 2013
	Previously Reported			Revised			Previously Reported			Revised			Previously Reported			Revised
Cost accruals and revenue deferrals	$	130.8		$	170.2		$	68.6		$	103.3		$	158.3		$	224.7
Payments and revenue recognized		(74.8	)		(114.2	)		(58.5	)		(93.2	)		(130.3	)		(196.7	)