Ford 2010 Annual Report Download - page 109

Download and view the complete annual report

Please find page 109 of the 2010 Ford annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 184

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169
  • 170
  • 171
  • 172
  • 173
  • 174
  • 175
  • 176
  • 177
  • 178
  • 179
  • 180
  • 181
  • 182
  • 183
  • 184

Notes to the Financial Statements
Ford Motor Company | 2010 Annual Report 107
NOTE 7. FINANCE RECEIVABLES (Continued)
Impaired receivables with no related allowance for credit losses recorded are primarily attributable to accounts for
which the uncollectible portion of the receivables has already been charged off.
Troubled Debt Restructurings
A restructuring of debt constitutes a troubled debt restructuring if Ford Credit grants a concession for economic or legal
reasons related to the debtor's financial difficulties that Ford Credit otherwise would not consider in the normal course of
business.
Consumer. While payment extensions are granted on consumer finance receivables in the normal course of the
collection process, no concessions are made on the principal balance loaned or the interest rate charged. Payment
extensions typically result in a one month deferral of the consumer's normal monthly payment and do not constitute a
troubled debt restructuring.
Non-consumer. Within Ford Credit's non-consumer receivables segment, only dealer loans subject to forbearance,
moratoriums, extension agreements or other actions intended to minimize economic loss and to avoid foreclosure or
repossession of collateral constitute troubled debt restructurings.
Dealer loans involved in troubled debt restructurings are assessed for impairment and included in Ford Credit's
allowance for credit losses based on either the present value of the expected future cash flows of the receivable
discounted at the loan's original effective interest rate, or the fair value of the collateral adjusted for estimated costs to sell.
For loans where foreclosure is probable, the fair value of the collateral is used to estimate the specific impairment. An
impairment charge is recorded as part of the provision to the allowance for credit losses for the amount by which the
recorded investment of the receivable exceeds its estimated fair value.
Ford Credit does not grant concessions on the principal balance of dealer loan modifications, but may make other
concessions if the dealer is experiencing financial difficulties. The balance of dealer loans involved in troubled debt
restructurings during the year ended December 31, 2010 was $13 million.
See Note 9 for additional information related to the development of Ford Credit's allowance for credit losses.
NOTE 8. NET INVESTMENT IN OPERATING LEASES
Net investment in operating leases on our balance sheet consists primarily of lease contracts for vehicles with retail
customers, daily rental companies, and fleet customers. Assets subject to operating leases are depreciated on the
straight-line method over the term of the lease to reduce the asset to its estimated residual value. Estimated residual
values are based on assumptions for used vehicle prices at lease termination and the number of vehicles that are
expected to be returned.