8. Maintenance and Warranty

 

Sales of devices generally include an initial warranty for parts and services for one year in the U.S. and two years in Europe, the Middle East and Africa. During the six months ended June 30, 2016, the Company determined it had sufficient historical experience of warranty costs to estimate future costs for devices sold. As a result, and beginning during the six months ended June 30, 2016, a liability for the estimated cost of product warranty is established at the time revenue is recognized based on the historical experience of known product failure rates and expected material and labor costs to provide warranty services. From time to time, specific additional warranty accruals may be made if unforeseen technical problems arise. Alternatively, if estimates are determined to be greater than the actual amounts necessary, a portion of the liability may be reversed in future periods. Warranty costs are reflected in the condensed consolidated statements of operations and comprehensive loss as a component of costs of revenue.

 

 

A reconciliation of the changes in the maintenance and warranty liabilities for the period ended June 30, 2016 is as follows:

 

		2016
		Maintenance			Warranty			Total
Balance at December 31, 2015		$	-		$	-		$	-
Additions for estimated future expense			911			255			1,166
Incurred costs			(175)			(17)			(192)
Balance at June 30, 2016		$	736		$	238		$	974
Current portion			736			217			953
Long-term portion			-			21			21
Total		$	736		$	238		$	974

 

The long-term portion of warranty accrual is included as a component of other long-term liabilities in the condensed consolidated balance sheets.