GE 2013 Annual Report Download - page 86

84 GE 2013 ANNUAL REPORT
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perspective of a market participant that holds that instrument
as an asset; to permit an entity to measure the fair value of cer-
tain fi nancial instruments on a net basis rather than based on
its gross exposure when the reporting entity manages its fi nan-
cial instruments on the basis of such net exposure; that in the
absence of a Level 1 input, a reporting entity should apply premi-
ums and discounts when market participants would do so when
pricing the asset or liability consistent with the unit of account;
and that premiums and discounts related to size as a character-
istic of the reporting entity’s holding are not permitted in a fair
value measurement. Adopting these amendments had no effect
on the fi nancial statements.
On January 1, 2011, we adopted FASB ASU 2009-13 and ASU
2009-14, amendments to ASC 605, Revenue Recognition and ASC
985, Software, respectively, (ASU 2009-13 & 14). ASU 2009-13
requires the allocation of consideration to separate components
of an arrangement based on the relative selling price of each
component. ASU 2009-14 requires certain software-enabled
products to be accounted for under the general accounting stan-
dards for multiple component arrangements. These amendments
were effective for new revenue arrangements entered into or
materially modifi ed on or subsequent to January 1, 2011.
Although the adoption of these amendments eliminated the
allocation of consideration using residual values, which was
applied primarily in our Healthcare segment, the overall impact of
adoption was insignifi cant to our fi nancial statements. In addition,
there are no signifi cant changes to the number of components or
the pattern and timing of revenue recognition following adoption.
On July 1, 2011, we adopted FASB ASU 2011-02, an amend-
ment to ASC 310, Receivables. This ASU provides guidance for
determining whether the restructuring of a debt constitutes a
TDR and requires that such actions be classifi ed as a TDR when
there is both a concession and the debtor is experiencing fi nan-
cial diffi culties. The amendment also clarifi es guidance on a
creditor’s evaluation of whether it has granted a concession.
The amendment applies to restructurings that have occurred
subsequent to January 1, 2011. As a result of adopting these
amendments on July 1, 2011, we have classifi ed an additional
$271 million of fi nancing receivables as TDRs and have recorded
an increase of $77 million to our allowance for losses on fi nancing
receivables. See Note 6.
Note 2.
Assets and Liabilities of Businesses Held for Sale and
Discontinued Operations
Assets and Liabilities of Businesses Held for Sale
In the fi rst quarter of 2013, we committed to sell certain of
our machining and fabrication businesses at Aviation and our
Consumer auto and personal loan business in Portugal. We com-
pleted the sale of our Consumer auto and personal loan business
in Portugal on July 15, 2013 for proceeds of $83 million. We
completed the sale of our machining & fabrication business on
December 2, 2013 for proceeds of $108 million.
In the third quarter of 2012, we completed the sale of our CLL
business in South Korea for proceeds of $168 million.
In the second quarter of 2012, we committed to sell a por-
tion of our Business Properties portfolio (Business Property) in
Real Estate, including certain commercial loans, the origination
and servicing platforms and the servicing rights on loans previ-
ously securitized by GECC. We completed the sale of Business
Property on October 1, 2012 for proceeds of $2,406 million. We
deconsolidated substantially all Real Estate securitization entities
in the fourth quarter of 2012, as servicing rights related to these
entities were transferred to the buyer at closing.
NBCU
On January 28, 2011, we transferred the assets of the
NBCUniversal business (NBCU) and Comcast Corporation
(Comcast) transferred certain of its assets to a newly formed
entity, NBCUniversal LLC (NBCU LLC). In connection with the trans-
action, we received $6,176 million in cash from Comcast (which
included $49 million of transaction-related cost reimbursements)
and a 49% interest in NBCU LLC. Comcast held the remaining 51%
interest in NBCU LLC. In connection with the transaction, we also
entered into a number of agreements with Comcast governing
the operation of the venture and transitional services, employee,
tax and other matters. In addition, Comcast is obligated to share
with us potential tax savings associated with their purchase of its
51% NBCU LLC member interest, if realized. We did not recognize
these potential future payments as consideration for the sale, but
record such payments in income as they are received.
Following the transaction, we deconsolidated NBCU and we
accounted for our investment in NBCU LLC under the equity
method. We recognized a pre-tax gain on the sale of $3,705 mil-
lion ($526 million after tax). In connection with the sale, we
recorded income tax expense of $3,179 million, refl ecting the low
tax basis in our investment in the NBCU business and the recog-
nition of deferred tax liabilities related to our 49% investment in
NBCU LLC. As our investment in NBCU LLC was structured as a
partnership for U.S. tax purposes, U.S. taxes were recorded sepa-
rately from the equity investment.
At December 31, 2012, the carrying amount of our equity
investment in NBCU LLC was $18,887 million, reported in the
“All other assets” caption in our Statement of Financial Position.
At December 31, 2012, deferred tax liabilities related to our