General Motors 2012 Annual Report Download - page 90

GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
We record the earnings effect resulting from the change in fair value of automotive operations derivative instruments in Interest
income and other non-operating income, net. We record the earnings effect resulting from the change in fair value of derivative
instruments entered into by GM Financial in GM Financial operating and other expenses.
Effective changes in fair value of derivatives designated as cash flow hedges are recorded in Cash flow hedging gains (losses), net
within a separate component of Other comprehensive income (OCI). Amounts are reclassified from Accumulated other
comprehensive income when the underlying hedged item affects earnings. All ineffective changes in fair value are recorded in
earnings. We also discontinue hedge accounting prospectively when it is determined that a derivative instrument has ceased to be
effective as an accounting hedge or if the underlying hedged cash flow is no longer probable of occurring.
We enter into contracts with counterparties that we believe are creditworthy and generally settle on a net basis. We perform a
quarterly assessment of our counterparty credit risk, including a review of credit ratings, credit default swap rates and potential
nonperformance of the counterparty. Based on our most recent quarterly assessment of our counterparty credit risk, we consider this
risk to be low.
The cash flows from derivative instruments are classified in the same categories as the hedged items in the consolidated statement
of cash flows.
Foreign Currency Transactions and Translation
The assets and liabilities of foreign subsidiaries, that use the local currency as their functional currency, are translated to U.S.
Dollars based on the current exchange rate prevailing at each balance sheet date and any resulting translation adjustments are included
in Accumulated other comprehensive income. The assets and liabilities of foreign subsidiaries whose local currency is not their
functional currency are remeasured from their local currency to their functional currency, and then translated to U.S. Dollars.
Revenues and expenses are translated into U.S. Dollars using the average exchange rates prevailing for each period presented.
Gains and losses arising from foreign currency transactions and the effects of remeasurements discussed in the preceding paragraph
are recorded in Automotive cost of sales and GM Financial operating and other expenses unless related to Automotive debt, which are
recorded in Interest income and other non-operating income, net.
The following table summarizes the effects of foreign currency transactions and remeasurement (dollars in millions):
Years Ended December 31,
2012 2011 2010
Foreign currency transaction and remeasurement losses .................................. $117 $55 $210
Recently Adopted Accounting Principles
In 2012 we adopted the provisions of Accounting Standards Update (ASU) 2011-05, “Presentation of Comprehensive Income”
(ASU 2011-05) that requires presentation of all non-owner changes in equity in one continuous statement of comprehensive income or
in two separate but consecutive statements. We elected to provide a separate statement of comprehensive income for all periods
presented. The amendments in this update do not change the items that must be reported in OCI or when an OCI item must be
reclassified to net income. The adoption of ASU 2011-05 did not affect our consolidated statements of financial position, results of
operations and cash flows.
ASU 2011-05 was modified in December 2011 by the issuance of ASU 2011-12, “Deferral of the Effective Date for Amendments
to the Presentation of Reclassifications of Items out of Accumulated Other Comprehensive Income in Accounting Standards Update
No. 2011-05.” This update indefinitely defers certain provisions of ASU 2011-05 that require the disclosure of the amount of
reclassifications of items from OCI to net income by component of net income and by component of OCI.
General Motors Company 2012 ANNUAL REPORT 87