General Motors 2011 Annual Report Download - page 88

GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Valuation of Cost and Equity Method Investments
When events and circumstances warrant, investments accounted for under the cost or equity method of accounting are evaluated for
impairment. An impairment charge is recorded whenever a decline in value of an investment below its carrying amount is determined
to be other than temporary. In determining if a decline is other than temporary, factors such as the length of time and extent to which
the fair value of the investment has been less than the carrying amount of the investment, the near-term and longer-term operating and
financial prospects of the affiliate and the intent and ability to hold the investment for a period of time sufficient to allow for any
anticipated recovery are considered. Impairment charges related to equity method investments are recorded in Equity income, net of
tax. Impairment charges related to cost method investments are recorded in Interest income and other non-operating, net.
Property, net
Property, plant and equipment, including internal use software, is recorded at cost. Major improvements that extend the useful life
or add functionality of property are capitalized. The gross amount of assets under capital leases is included in property, plant and
equipment. Expenditures for repairs and maintenance are charged to expense as incurred. We depreciate all depreciable property using
the straight-line method. Leasehold improvements are amortized over the period of lease or the life of the asset, whichever is shorter.
For depreciable property placed in service before January 2001, Old GM used accelerated depreciation methods. For depreciable
property placed in service after January 2001, Old GM used the straight-line method. The amortization of the assets under capital
leases is included in depreciation expense. Upon retirement or disposition of property, plant and equipment, the cost and related
accumulated depreciation are removed from the accounts and any resulting gain or loss is recorded in earnings. Impairment charges
related to property are recorded in Automotive cost of sales or GM Financial operating and other expenses.
Special Tools
Special tools represent product-specific powertrain and non-powertrain related tools, dies, molds and other items used in the vehicle
manufacturing process. Expenditures for special tools are recorded at cost and are capitalized. In connection with our application of
fresh-start reporting, we began amortizing all non-powertrain special tools over their estimated useful lives using an accelerated
amortization method. We amortize powertrain special tools over their estimated useful lives using the straight-line method. Old GM
amortized all special tools using the straight-line method over their estimated useful lives.
Goodwill
Goodwill arises from the application of fresh-start reporting and acquisitions accounted for as business combinations. Goodwill is
tested for impairment for all reporting units on an annual basis during the fourth quarter, or more frequently, if events occur or
circumstances change that would warrant such a review. An impairment charge is recorded for the amount, if any, by which the
carrying amount of goodwill exceeds its implied fair value. Fair values of reporting units are established using a discounted cash flow
method. Where available and as appropriate, comparative market multiples and the quoted market price for our common stock are
used to corroborate the results of the discounted cash flow method. Our reporting units are GMNA, GME, GM Financial and various
reporting units within the GMIO and GMSA segments. Due to the integrated nature of our manufacturing operations and the sharing
of assets, other resources and vehicle platforms among brands within GMNA and GME and because financial information by brand or
country is not discrete below the operating segment level, GMNA and GME do not contain reporting units below the operating
segment level. GM Financial also does not contain reporting units below the operating segment level. GMIO and GMSA are less
integrated given the lack of regional trade pacts and other unique geographical differences and thus contain separate reporting units
below the operating segment level. Goodwill would be reassigned on a relative-fair-value basis to a portion of a reporting unit to be
disposed of or upon the reorganization of the composition of one or more of our reporting units, unless the reporting unit was never
integrated.
Intangible Assets, net
Intangible assets, excluding Goodwill, primarily include brand names (including defensive intangibles associated with discontinued
brands), technology and intellectual property, customer relationships and dealer networks.
86 General Motors Company 2011 Annual Report