Warranty Reserves

3 Months Ended

Mar. 31, 2012

Warranty Reserves

Warranty Reserves

Note 13. Warranty Reserves

        Sales of Aircranes to third parties include limited warranty provisions that require the Company to remedy deficiencies in quality or performance of its products over a specified period of time, generally from two to five years depending on the type of part, component or airframe, including technical assistance services. Warranty reserves are established at the time that revenue is recognized at levels that represent the estimate of the costs that will be incurred to fulfill those warranty requirements and is included in accrued and other current liabilities in the financial statements. Warranty reserves may be adjusted periodically to sustain levels representing the estimate of the costs to fulfill those warranty requirements over the remaining life of the warranty.

        There was no warranty expense for the three months ended March 31, 2012 and 2011. As of March 31, 2012 and December 31, 2011 the warranty reserve was $0.7 million and $1.0 million, respectively.