Table:
|  |  | Fiscal Year Ended |  |
| --- | --- | --- | --- |
|  | December 28,<br>2019 | December 29, 2018 | December 30, 2017 |
| Balance at beginning of year | $2,102 | $ 3,662 | $2,972 |
| Accruals | 3,881 | 3,181 | 8,115 |
| Settlements | (4,041) | (4,741) | (7,425) |
| Balance at end of year | $1,942 | $2,102 | $3,662 |
Paragraphs:
Warranty Obligations
We offer warranties on certain products and record a liability for the estimated future costs associated with warranty claims at the time revenue is recognized. The warranty liability is based upon historical experience and our estimate of the level of future costs. While we engage in product quality programs and processes, our warranty obligation is affected by product failure rates, material usage and service delivery costs incurred in correcting a product failure.
We continuously monitor product returns for warranty and maintain a reserve for the related expenses based upon our historical experience and any specifically identified field failures. As we sell new products to our customers, we must exercise considerable judgment in estimating the expected failure rates. This estimating process is based on historical experience of similar products, as well as various other assumptions that we believe to be reasonable under the circumstances.
We provide for the estimated cost of product warranties at the time revenue is recognized. Warranty costs are reflected in the Consolidated Statement of Income as a Cost of revenues. A reconciliation of the changes in our warranty liability is as follows (in thousands):
Question:
What is the basis of warranty liability?
Answer: based upon historical experience and our estimate of the level of future costs.