Annual report pursuant to Section 13 and 15(d)

Accrued Warranty Reserve

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Accrued Warranty Reserve
12 Months Ended
Mar. 31, 2021
Accrued Warranty Reserve  
Accrued Warranty Reserve

6. Accrued Warranty Reserve

The Company provides for the estimated costs of warranties at the time revenue is recognized. The specific terms and conditions of those warranties vary depending upon the microturbine product sold and the geography of sale. The Company’s product warranties generally start from the delivery date and continue for up to twenty-four months. Factors that affect the Company’s warranty obligation include product failure rates, anticipated hours of product operations and costs of repair or replacement in correcting product failures. These factors are estimates that may change based on new information that becomes available each period. Similarly, the Company also accrues the estimated costs to address reliability repairs on products no longer in warranty when, in the Company’s judgment, and in accordance with a specific plan developed by the Company, it is prudent to provide such repairs. The Company assesses the adequacy of recorded warranty liabilities quarterly and makes adjustments to the liability as necessary. When the Company has sufficient evidence that product changes are altering the historical failure occurrence rates, the impact of such changes is then taken into account in estimating future warranty liabilities. Changes in the accrued warranty reserve are as follows (in thousands):

 

 

 

 

 

 

 

 

 

March 31,

    

March 31,

 

 

2021

 

2020

Balance, beginning of the period

 

$

1,934

 

$

2,614

Standard warranty provision

 

 

985

 

 

594

Accrual related to reliability repair programs

 

 

4,945

 

 

 —

Deductions for warranty claims

 

 

(2,014)

 

 

(1,274)

Balance, end of the period

 

$

5,850

 

$

1,934

During the fourth quarter of Fiscal 2021, we recorded a specific $4.9 million accrual related to reliability repair programs to account for the replacement of remaining high risk failure parts in some of our fielded units due to a supplier defect.