Ford 2007 Annual Report Download - page 63

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Notes to the Financial Statements
Ford Motor Company | 2007 Annual Report 61
NOTE 1. PRINCIPLES OF PRESENTATION AND CONSOLIDATION
Principles of Presentation and Consolidation
Our financial statements are presented in accordance with generally accepted accounting principles ("GAAP") in the
United States and are shown on a consolidated basis, and on a sector basis for Automotive and Financial Services. We
believe the additional information provided in the sector statements enables the reader to better understand the operating
performance, financial position, cash flows, and liquidity of our two very different businesses. The difference between the
total assets and total liabilities as presented in our sector balance sheet and our consolidated balance sheet is the result of
netting of deferred tax assets and liabilities.
Our financial statements include consolidated majority-owned subsidiaries and consolidated variable interest entities
("VIEs") of which we are the primary beneficiary. The equity method of accounting is used for our investments in entities
for which we do not have control or are not the primary beneficiary, but over whose operating and financial policies we
have the ability to exercise significant influence.
To provide comparative prior-year balance sheets, certain amounts on our December 31, 2006 consolidated and
sector balance sheets and related footnotes have been reclassified for operations held for sale in 2007. See Note 20 for
information about our held-for-sale operations.
Certain Transactions Between Automotive and Financial Services Sectors
Intersector transactions occur in the ordinary course of business. We formally documented certain long-standing
business practices with Ford Motor Credit Company LLC ("Ford Credit"), our indirect wholly-owned subsidiary, in a 2001
agreement that was amended in 2006. Additional details on certain transactions and the effect on each sector's balance
sheet at December 31 are shown below (in billions):
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Additionally, amounts recorded as revenue by the Financial Services sector and billed to the Automotive sector for
interest supplements and other support costs for special financing and leasing programs were $4.6 billion in 2007,
$3.5 billion in 2006, and $3.3 billion in 2005. The Automotive sector had accrued in Accrued liabilities and deferred
revenue $5.4 billion and $4.6 billion for interest supplements at December 31, 2007 and 2006, respectively, and about
$900 million for residual-value supplements in the United States and Canada to be paid to Ford Credit over the term of the
related finance contracts at December 31, 2007 and 2006.