GE 2015 Annual Report Download - page 171

FINANCIAL STATEMENTS PRESENTATION & POLICIES
GE 2015 FORM 10-K 143
INVESTMENT SECURITIES
We report investments in debt and marketable equity securities, and certain other equity securities, at fair value. See Note 19 for further
information on fair value. Unrealized gains and losses on available-for-sale investment securities are included LQVKDUHRZQHUV¶HTXLW\
net of applicable taxes and other adjustments.
We regularly review investment securities for impairment using both quantitative and qualitative criteria. For debt securities, if we do not
intend to sell the security or it is not more likely than not that we will be required to sell the security before recovery of our amortized
cost, we evaluate other qualitative criteria to determine whether we do not expect to recover the amortized cost basis of the security,
such as the financial health of and specific prospects for the issuer, including whether the issuer is in compliance with the terms and
covenants of the security. We also evaluate quantitative criteria including determining whether there has been an adverse change in
expected future cash flows. If we do not expect to recover the entire amortized cost basis of the security, we consider the security to be
other-than-WHPSRUDULO\LPSDLUHGDQGZHUHFRUGWKHGLIIHUHQFHEHWZHHQWKHVHFXULW\¶VDPRUWL]HGFRVWEDVLVDQGLWVUHFRYHUDEOH amount
LQHDUQLQJVDQGWKHGLIIHUHQFHEHWZHHQWKHVHFXULW\¶VUHFRYHUDEOHDPRXQWDQGIDLUYDOXHLQRWKHUFRPSUHKHQVLYHLQFRPH,IZHintend to
sell the security or it is more likely than not we will be required to sell the security before recovery of its amortized cost basis, the
security is also considered other-than-WHPSRUDULO\LPSDLUHGDQGZHUHFRJQL]HWKHHQWLUHGLIIHUHQFHEHWZHHQWKHVHFXULW\¶VDPRUWL]HG
cost basis and its fair value in earnings. For equity securities, we consider the length of time and magnitude of the amount that each
security is in an unrealized loss position. If we do not expect to recover the entire amortized cost basis of the security, we consider the
security to be other-than-temporarily impaired, and we record the difference betZHHQWKHVHFXULW\¶VDPRUWL]HGFRVWEDVLVDQGLWVIDLU
value in earnings.
Realized gains and losses are accounted for on the specific identification method. Unrealized gains and losses on investment securities
classified as trading and certain retained interests are included in earnings.
INVENTORIES
All inventories are stated at the lower of cost or realizable values. Cost for a portion of GE U.S. inventories is determined on a last-in,
first-out (LIFO) basis. Cost of other GE inventories is determined on a first-in, first-out (FIFO) basis. LIFO was used for 34% and 40% of
GE inventories at 2015 and 2014, respectively.
GOODWILL AND OTHER INTANGIBLE ASSETS
We do not amortize goodwill, but test it at least annually for impairment at the reporting unit level. A reporting unit is the operating
segment, or one level below that operating segment (the component level) if discrete financial information is prepared and regularly
reviewed by segment management. However, components are aggregated as a single reporting unit if they have similar economic
characteristics. We recognize an impairment charge if the carrying amount of a reporting unit exceeds its fair value and the carrying
DPRXQWRIWKHUHSRUWLQJXQLW¶VJRRGZLOOH[FHHGVWKHLPSOLHGIDLUYDOXHRIWKDWJRRGwill. We use a market approach, when available and
appropriate, or the income approach, or a combination of both to establish fair values. When a portion of a reporting unit is disposed,
goodwill is allocated to the gain or loss on disposition based on the relative fair values of the business or businesses disposed and the
portion of the reporting unit that will be retained.
We amortize the cost of other intangibles over their estimated useful lives unless such lives are deemed indefinite. The cost of
intangible assets is generally amortized on a straight-OLQHEDVLVRYHUWKHDVVHW¶VHVWLPDWHGHFRQRPLFOLIHH[FHSWWKDWLQGLYLGXDOO\
significant customer-related intangible assets are amortized in relation to total related sales. Amortizable intangible assets are reviewed
for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. In
these circumstances, they are tested for impairment based on undiscounted cash flows and, if impaired, written down to fair value
based on either discounted cash flows or appraised values. Intangible assets with indefinite lives are tested annually for impairment and
written down to fair value as required.
The cost of individually significant customer relationships is amortized in proportion to estimated total related sales; cost of other
intangible assets is generally amortized on a straight-OLQHEDVLVRYHUWKHDVVHW¶VHVWLPDWHGHFRQRPLFOLIH:HUHYLHZORQJ-lived assets
for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable.
GE 2015 FORM 10-K 143