General Motors 2011 Annual Report Download - page 84

GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Revenue Recognition
Automotive
Automotive sales and revenue are primarily composed of revenue generated from the sale of vehicles. Vehicle sales are recorded
when title and risks and rewards of ownership have passed, which is generally when a vehicle is released to the carrier responsible for
transporting it to a dealer and when collectability is reasonably assured. Provisions for recurring dealer and customer sales and leasing
incentives, consisting of allowances and rebates, are recorded as reductions to Automotive sales and revenue at the time of vehicle
sales. All other incentives, allowances, and rebates related to vehicles previously sold are recorded as reductions to Automotive sales
and revenue when announced.
Vehicle sales to daily rental car companies with guaranteed repurchase obligations are accounted for as operating leases. Estimated
lease revenue is recorded ratably over the estimated term of the lease based on the difference between net sales proceeds and the
guaranteed repurchase amount. The difference between the cost of the vehicle and estimated residual value is depreciated on a
straight-line basis over the estimated term of the lease.
Payments received from banks for credit card programs in which there is a redemption liability are recorded on a straight-line basis
over the estimated period of time the customer will accumulate and redeem their rebate points. This time period is estimated to be 60
months for the majority of the credit card programs. The redemption liability anticipated to be paid to the dealer is estimated and
accrued at the time specific vehicles are sold to the dealer. The redemption cost is classified as a reduction of Automotive sales.
Automotive Financing — GM Financial
Finance income earned on receivables is recognized using the effective interest method. Fees and commissions (including incentive
payments) received and direct costs of originating loans are deferred and amortized over the term of the related finance receivables
using the effective interest method and are removed from the consolidated balance sheets when the related finance receivables are
sold, charged off or paid in full. Accrual of finance charge income is suspended on accounts that are more than 60 days delinquent,
accounts in bankruptcy, and accounts in repossession. Payments received on nonaccrual loans are first applied to any fees due, then to
any interest due and then any remaining amounts are recorded to principal. Interest accrual resumes once an account has received
payments bringing the delinquency to less than 60 days past due.
Income from operating lease assets, which includes lease origination fees, net of lease origination costs and incentives, is recorded
as operating lease revenue on a straight-line basis over the term of the lease agreement.
Advertising
The following table summarizes advertising expenditures, which are expensed as incurred (dollars in millions):
Successor Predecessor
Year Ended
December 31, 2011
Year Ended
December 31, 2010
July 10, 2009
Through
December 31, 2009
January 1, 2009
Through
July 9, 2009
Advertising expense ............................... $4,478 $4,259 $2,110 $1,471
82 General Motors Company 2011 Annual Report