Table:
|  | December 31, |  |
| --- | --- | --- |
|  | 2018 | 2019 |
| Balance January 1 | 6,562 | 7,955 |
| Charged to cost of sales | 18,408 | 26,301 |
| Deductions | (8,985) | (12,232) |
| Releases of expired warranty | (8,214) | (5,684) |
| Foreign currency translation effect | 184 | 84 |
| Balance December 31 | 7,955 | 16,424 |
Paragraphs:
NOTE 14. PROVISION FOR WARRANTY
The changes in the amount of provision for warranty are as follows:
Costs of warranty include the cost of labor and materials to repair a product during the warranty period. The main term of the warranty period is one year. The Company accrues for the estimated cost of the warranty on its products shipped in the provision for warranty, upon recognition of the sale of the product. The costs are estimated based on actual historical expenses incurred and on estimated future expenses related to current sales, and are updated periodically. Actual warranty costs are charged against the provision for warranty.
Question:
How are warranty costs estimated?
Answer: based on actual historical expenses incurred and on estimated future expenses related to current sales, and are updated periodically