GE 2005 Annual Report Download - page 83

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NBC Universal film and television costs
We defer film and television production costs, including direct costs, production overhead, development costs and
interest. We do not defer costs of exploitation, which principally comprise costs of film and television program
marketing and distribution. We amortize deferred film and television production costs, as well as associated
participation and residual costs, on an individual production basis using the ratio of the current period’ s gross
revenues to estimated total remaining gross revenues from all sources; we state such costs at the lower of amortized
cost or fair value. We defer the costs of acquired broadcast material, including rights to material for use on NBC
Universal’ s broadcast and cable networks, at the earlier of acquisition or when the license period begins and the
material is available for use. We amortize acquired broadcast material and rights when we broadcast the associated
programs; we state such costs at the lower of amortized cost or net realizable value.
Losses on financing receivables
Our allowance for losses on financing receivables represents our best estimate of probable losses inherent in the
portfolio. Our method of calculating estimated losses depends on the size, type and risk characteristics of the related
receivables. Write-offs are deducted from the allowance for losses and subsequent recoveries are added. Impaired
financing receivables are written down to the extent that we judge principal to be uncollectible.
Our portfolio consists entirely of homogenous consumer loans and of commercial loans and leases. The
underlying assumptions, estimates and assessments we use to provide for losses are continually updated to reflect
our view of current conditions. Changes in such estimates can significantly affect the allowance and provision for
losses. It is possible to experience credit losses that are different from our current estimates.
Our consumer loan portfolio consists of smaller balance, homogenous loans including card receivables,
installment loans, auto loans and leases and residential mortgages. We collectively evaluate each portfolio for
impairment. The allowance for losses on these receivables is established through a process that estimates the
probable losses inherent in the portfolio based upon statistical analyses of portfolio data. These analyses include
migration analysis, in which historical delinquency and credit loss experience is applied to the current aging of the
portfolio, together with other analyses that reflect current trends and conditions. We also consider overall portfolio
indicators including nonearning loans, trends in loan volume and lending terms, credit policies and other observable
environmental factors.
During 2004, Consumer Finance adopted a global policy for uncollectible receivables that accelerated
write-offs to follow one consistent basis. We write off unsecured closed-end installment loans at 120 days
contractually past due and unsecured open-ended revolving loans at 180 days contractually past due. We write down
loans secured by collateral other than real estate to the fair value of the collateral, less costs to sell, when such loans
are 120 days past due. Consumer loans secured by residential real estate (both revolving and closed-end loans) are
written down to the fair value of collateral, less costs to sell, no later than when they become 360 days past due.
Unsecured loans in bankruptcy are written off within 60 days of notification of filing by the bankruptcy court or
within contractual write-off periods, whichever occurs earlier.