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