General Motors 2012 Annual Report Download - page 97

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GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Substantially all commercial finance receivables have variable interest rates and maturities of one year. Therefore, the carrying
amount is considered to be a reasonable estimate of fair value.
GM Financial purchases consumer finance contracts from automobile dealers without recourse, and accordingly, the dealer has no
liability to GM Financial if the consumer defaults on the contract. Finance receivables are collateralized by vehicle titles and GM
Financial has the right to repossess the vehicle in the event the consumer defaults on the payment terms of the contract.
At December 31, 2012 and 2011 the accrual of finance charge income has been suspended on delinquent consumer finance
receivables based on contractual amounts due of $503 million and $439 million. At December 31, 2012 there were no commercial
finance receivables or loans on non-accrual status.
GM Financial reviews its pre-acquisition portfolio for differences between contractual cash flows and the cash flows expected to be
collected from its initial investment in the pre-acquisition portfolio to determine if the difference is attributable, at least, in part to
credit quality. For the period ended December 31, 2012 as a result of improvements in the credit performance of the pre-acquisition
portfolio, which resulted in an increase of expected cash flows of $170 million, GM Financial transferred the excess non-accretable
difference to accretable yield. GM Financial will recognize this excess as finance charge income over the remaining life of the
portfolio.
The following table summarizes accretable yield (dollars in millions):
Years Ended December 31,
2012 2011
Balance at beginning of period ............................................................ $737 $1,201
Accretion of accretable yield ............................................................. (503) (725)
Transfer from non-accretable difference .................................................... 170 261
Balance at end of period ................................................................. $404 $ 737
The following table summarizes the allowance for post-acquisition loan losses on consumer and commercial finance receivables
(dollars in millions):
December 31, 2012 December 31, 2011
Current ........................................................................ $266 $136
Non-current .................................................................... 85 43
Total allowance for post-acquisition loan losses ....................................... $351 $179
The following table summarizes activity for the allowance for post-acquisition loan losses on consumer and commercial finance
receivables (dollars in millions):
Years Ended December 31, October 1, 2010
Through
December 31, 20102012 2011
Balance at beginning of period ............................................... $179 $ 26 $—
Provision for loan losses .................................................... 304 178 26
Charge-offs .............................................................. (304) (66) —
Recoveries ............................................................... 172 41 —
Balance at end of period .................................................... $351 $179 $26
General Motors Company 2012 ANNUAL REPORT94