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GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
impairment charges primarily related to our GM Korea Company (GM Korea) and Holden reporting units. We performed event-
driven goodwill impairment tests for GM Korea in 2013, 2012 and 2011 as the fair value of GM Korea continued to be below its
carrying amount due to ongoing economic weakness in certain markets to which GM Korea exports coupled with lower forecasted
margins resulting from higher raw material costs and unfavorable foreign exchange rates. Furthermore, in the three months ended
December 31, 2013 we announced our plans to cease mainstream distribution of Chevrolet brand in Western and Central Europe that
resulted in the impairment of the remaining goodwill. Chevrolet sales in Europe are included in our GM Korea operations. We also
recorded a Goodwill impairment charge in the three months ended December 31, 2013 associated with our GM India reporting unit
resulting from lower forecasted profitability in India due to lower than expected sales performance of our current product offerings in
India, higher raw material costs, unfavorable foreign exchange rates and recent deterioration in local market conditions. Refer to Note
9 for additional information on our operations in India. In the three months ended December 31, 2011 we reversed a deferred tax asset
valuation allowance for our Holden reporting unit that resulted in the carrying amount of this reporting unit exceeding its fair value.
At December 31, 2013 the goodwill balance was $0 for all of the reporting units in GMIO.
Impairment Charges
The impairment charges recorded as a result of the initial adoption of ASU 2010-28 and the annual and event-driven goodwill
impairment tests in the years ended December 31, 2013, 2012 and 2011 represent the net decreases in implied goodwill resulting
primarily from decreases in the fair value-to-U.S. GAAP differences attributable to those assets and liabilities that gave rise to
goodwill upon our application of fresh-start reporting. The net decreases resulted primarily from the reversal of our deferred tax asset
valuation allowances for certain reporting units thus resulting in the recorded amount for deferred taxes exceeding their fair values
which under Accounting Standards Codification (ASC) 805, “Business Combinations” (ASC 805) results in less implied goodwill.
The net decreases also resulted from improvements in our nonperformance risk and in our incremental borrowing rates since July 10,
2009. At certain of the testing dates the net decrease was also due to an increase in the high quality corporate bond rates utilized to
measure our employee benefit obligations and a decrease in credit spreads between high quality corporate bond rates and market
interest rates for companies with similar nonperformance risk. For the purpose of deriving an implied goodwill balance, deterioration
in the business outlook and anticipated restructuring activities for GME and GM Korea resulted in a reduction in the fair value of
certain tax attributes and an increase in estimated employee benefit obligations. The amount of implied goodwill derived from GM
India decreased primarily from a reduction in the fair value of certain tax attributes.
Fair Value Measurements
When performing our goodwill impairment testing, the fair values of our reporting units were determined based on valuation
techniques using the best available information, primarily discounted cash flow projections. We make significant assumptions and
estimates, which utilized Level 3 measures, about the extent and timing of future cash flows, growth rates, market share and discount
rates that represent unobservable inputs into our valuation methodologies. Our fair value estimates for annual and event-driven
impairment tests assume the achievement of the future financial results contemplated in our forecasted cash flows and there can be no
assurance that we will realize that value.
The valuation methodologies utilized to perform our goodwill impairment testing were consistent with those used in our application
of fresh-start reporting on July 10, 2009 and in any subsequent annual or event-driven goodwill impairment tests and utilized Level 3
measures. Because the fair value of goodwill can be measured only as a residual amount and cannot be determined directly we
calculated the implied goodwill for those reporting units failing Step 1 in the same manner that goodwill is recognized in a business
combination pursuant to ASC 805.
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2013 ANNUAL REPORT