Ford 2010 Annual Report Download - page 87

Notes to the Financial Statements
Ford Motor Company | 2010 Annual Report 85
NOTE 2. SUMMARY OF ACCOUNTING POLICIES (Continued)
Increases/(Decreases) in Accumulated other comprehensive income/(loss) resulting from translation adjustments were
as follows (in billions):
2010
20102010
2010
2009
20092009
2009
2008 20082008
2008
Beginning of year: foreign currency translation ................................
................................
$ 1.6 $ (0.6) $ 5.0
Adjustments due to change in net assets of foreign subsidiaries
................................
(0.5) 1.9 (3.8)
Deferred translation (gains)/losses reclassified to net income
*
................................
................................
(1.7) 0.3 (1.8)
Total translation adjustments (net of taxes)................................
................................
(2.2) 2.2 (5.6)
End of year: foreign currency translation................................................................
................................
$ (0.6) $ 1.6 $ (0.6)
______
* The adjustment for 2010 primarily relates to the sale of Volvo; the adjustment for 2008 primarily relates to the sale of Jaguar Land Rover and a portion
of our stake in Mazda Motor Corporation ("Mazda").
Gains or losses arising from transactions denominated in currencies other than the affiliate's functional currency, the
effect of remeasuring assets and liabilities of foreign subsidiaries using U.S. dollars as their functional currency, and the
results of our foreign currency hedging activities are reported in the same category as the underlying transaction. The net
after-tax gain/(loss) of this activity for 2010, 2009, and 2008 was $59 million, $(741) million, and $934 million, respectively.
Trade Receivables
Trade receivables, recorded on our consolidated balance sheet in Other receivables, net, consist primarily of
Automotive sector receivables for parts and accessories and receivables related to in-transit vehicles. Trade receivables
are initially recorded at the transaction amount. We record an allowance for doubtful accounts representing our estimate
of the probable losses inherent in trade receivables at the date of the balance sheet. At every reporting period, we assess
the adequacy of our allowance for doubtful accounts taking into consideration recoveries received during that period.
Additions to the allowance for doubtful accounts are made by recording charges to bad debt expense reported in
Automotive cost of sales on our statement of operations. Receivables are charged to the allowance for doubtful accounts
when an account is deemed to be uncollectible.
Revenue Recognition — Automotive Sector
Automotive sales consist primarily of revenue generated from the sale of vehicles, parts and accessories. Sales are
recorded when all risks and rewards of ownership are transferred to our customers (generally dealers and distributors).
For the majority of our sales, this occurs when products are shipped from our manufacturing facilities or delivered to our
customers. When vehicles are shipped to customers or vehicle modifiers on consignment, revenue is recognized when
the vehicle is sold to the ultimate customer. When we give our dealers the right to return eligible parts for credit, we
reduce the related revenue for expected returns.
We sell vehicles to daily rental companies subject to guaranteed repurchase options. These vehicles are accounted
for as operating leases. At the time of sale, the proceeds are recorded as deferred revenue in Accrued liabilities and
deferred revenue. The difference between the proceeds and the guaranteed repurchase amount is recognized in
Automotive sales over an average term of 8 months, using a straight-line method. The cost of the vehicles is recorded in
Net investment in operating leases and the difference between the cost of the vehicle and the estimated auction value is
depreciated in Automotive cost of sales over the term of the lease. At December 31, 2010 and 2009, we recorded
$1.4 billion and $2.5 billion as deferred revenue, respectively. See Note 8 for additional information.
Income generated from cash and cash equivalents, investments in marketable securities, and other miscellaneous
receivables is reported in Automotive interest income and other non-operating income/(expense), net.