General Motors 2010 Annual Report Download - page 152

GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Gains and losses arising from foreign currency transactions, which include the effects of remeasurements discussed in the preceding
paragraph, are recorded in Automotive cost of sales and GM Financial operating expenses and other.
The following table summarizes the effects of foreign currency transactions (dollars in millions):
Successor Predecessor
Year Ended
December 31, 2010
July 10, 2009
Through
December 31, 2009
January 1, 2009
Through
July 9, 2009
Year Ended
December 31, 2008
Gain (loss) resulting from foreign currency transactions .... $(210) $(755) $(1,077) $1,705
Policy, Warranty and Recall Campaigns
Automotive
The estimated costs related to policy and product warranties are accrued at the time products are sold. These estimates are
established using historical information on the nature, frequency, and average cost of claims of each vehicle line or each model year
of the vehicle line. Revisions are made when necessary, based on changes in these factors. Trends of claims are actively studied and
actions are taken to improve vehicle quality and minimize claims.
The estimated costs related to product recalls based on a formal campaign soliciting return of that product are accrued when they
are deemed to be probable and can be reasonably estimated.
Environmental Costs
Automotive
A liability for environmental remediation costs is recorded when a loss is probable and can be reasonably estimated. For
environmental sites where there are potentially multiple responsible parties, a liability for the allocable share of the costs related to
involvement with the site is recorded, as well as an allocable share of costs related to insolvent parties or unidentified shares, neither
of which are reduced for possible recoveries from insurance carriers. For environmental sites where we and Old GM are the only
potentially responsible parties, a liability is recorded for the total estimated costs of remediation before consideration of recovery from
insurers or other third parties. The process of estimating environmental remediation liabilities is complex and dependent primarily on
the nature and extent of historical information and physical data relating to a contaminated site, the complexity of the site, the
uncertainty as to what remediation and technology will be required, and the outcome of discussions with regulatory agencies and other
potentially responsible parties at multi-party sites.
We have an established process to develop environmental liabilities that is used globally. This process consists of a number of
phases that begins with visual site inspections and an examination of historical site records. Once a potential problem is identified,
physical sampling of the site, which may include analysis of ground water and soil borings, is performed. The evidence obtained is
then evaluated and if necessary, a remediation strategy is developed and submitted to the appropriate regulatory body for approval.
The final phase of this process involves the commencement of remediation activities according to the approved plan.
When applicable, estimated liabilities for costs relating to ongoing operating, maintenance, and monitoring at environmental sites
where remediation has commenced are recorded. Subsequent adjustments to initial estimates are recorded as necessary based upon
additional information obtained. In future periods, new laws or regulations, advances in remediation technologies and additional
information about the ultimate remediation methodology to be used could significantly change our estimates.
150 General Motors Company 2010 Annual Report