Ford 2013 Annual Report Download - page 80

78 Ford Motor Company | 2013 Annual Report
FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
NOTE 2. SUMMARY OF ACCOUNTING POLICIES
For each accounting topic that is addressed in its own footnote, the description of the accounting policy may be found
in the related footnote. The other significant accounting policies are described below.
Use of Estimates
The preparation of financial statements requires us to make estimates and assumptions that affect our results during
the periods reported. Estimates are used to account for certain items such as marketing accruals, warranty costs,
employee benefit programs, etc. Estimates are based on assumptions that we believe are reasonable under the
circumstances. Due to the inherent uncertainty involved with estimates, actual results may differ.
Foreign Currency Translation
The assets and liabilities of foreign subsidiaries using the local currency as their functional currency are translated to
U.S. dollars using end-of-period exchange rates and any resulting translation adjustments are reported in Other
comprehensive income/(loss). Upon sale or upon complete or substantially complete liquidation of an investment in a
foreign subsidiary, the accumulated amount of translation adjustments related to that entity is reclassified to net income as
part of the recognized gain or loss on the investment.
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 Automotive cost of sales, Selling, administrative, and
other expenses, and Automotive interest income and other income/(loss), net. The pre-tax gains/(losses) of this activity
for 2013, 2012, and 2011 was $(349) million, $(426) million, and $4 million, respectively.
Trade Receivables
Trade receivables, recorded on our consolidated balance sheet in Other receivables, net, consist primarily of
Automotive sector receivables for vehicles, parts, and accessories. Trade receivables initially are recorded at the
transaction amount. We record an allowance for doubtful accounts representing our estimate of the probable losses. 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. Receivables are charged to the allowance for doubtful accounts
when an account is deemed to be uncollectible.
Net Intangible Assets
We capitalize and amortize our finite-lived intangible assets over their estimated useful lives. Indefinite-lived
intangible assets are not amortized, but are tested for impairment annually or more frequently if events or circumstances
indicate the asset may be impaired. Our intangible assets are comprised primarily of license and advertising agreements,
land rights, patents, customer contracts, and technology. Our indefinite-lived intangibles have been tested for impairment
in 2013 and no impairment was required.
The net carrying amount of our intangible asset was $85 million and $87 million at December 31, 2013 and 2012,
respectively, and is reported in Other Assets on our balance sheet. Pre-tax amortization expense was $11 million,
$10 million, and $12 million at December 31, 2013, 2012, and 2011, respectively. Amortization for intangible assets is
forecasted to be $11 million in 2014 and each year thereafter.