Ford 2009 Annual Report Download - page 90

Notes to the Financial Statements
88 Ford Motor Company | 2009 Annual Report
NOTE 2. SUMMARY OF ACCOUNTING POLICIES
For each accounting topic that is addressed in its own footnote, the description of the accompanying accounting policy
may be found in the related footnote. The remaining accounting policies are described below.
Use of Estimates
The preparation of financial statements in accordance with U.S. GAAP requires us to make estimates and
assumptions that affect our reported amounts of assets and liabilities, our disclosure of contingent assets and liabilities at
the date of the financial statements, and our revenue and expenses during the periods reported. Estimates are used to
account for certain items such as marketing accruals, warranty costs, employee benefit programs, etc. Estimates are
based on historical experience, where applicable, and assumptions that we believe are reasonable under the
circumstances. Due to the inherent uncertainty involved with estimates, actual results may differ.
Foreign Currency Translation
The assets and liabilities of foreign subsidiaries using the local currency as their functional currency are translated to
U.S. dollars using end-of-period exchange rates and any resulting translation adjustments are reported in Accumulated
other comprehensive income/(loss). Upon sale or liquidation of an investment in a foreign subsidiary, the accumulated
amount of translation adjustments related to that entity are reclassified to net income as part of the recognized gain or
loss on the investment.
Increases/(decreases) in Accumulated other comprehensive income/(loss) resulting from translation adjustments were
as follows (in billions):







 


$GMXVWPHQWVGXHWRFKDQJHLQQHWDVVHWVRIIRUHLJQVXEVLGLDULHV 

     
'HIHUUHGWUDQVODWLRQJDLQVORVVHVUHFODVVLILHGWRQHWLQFRPH



     ಧ
7RWDOWUDQVODWLRQDGMXVWPHQWVQHWRIWD[HV

     
______
7KHDGMXVWPHQWSULPDULO\UHODWHVWRWKHVDOHRI-DJXDU/DQG5RYHUDQGDSRUWLRQRIRXUVWDNHLQ0D]GD0RWRU&RUSRUDWLRQ0D]GD
Gains or losses arising from transactions denominated in currencies other than the functional currency of the locations,
the effect of remeasuring assets and liabilities of foreign subsidiaries using U.S. dollars as their functional currency, and
the results of our foreign currency hedging activities are reported in Automotive cost of sales, Automotive interest income
and other non-operating income/(expense), net, and Selling, administrative, and other expenses. For additional
discussion of hedging activities, see Note 26. The net after-tax gain/(loss) of this activity for 2009, 2008, and 2007 was
$(757) million, $922 million, and $217 million, respectively.
Revenue Recognition — Automotive Sector
Automotive sales consist primarily of revenue generated from the sale of vehicles. Sales are recorded when the risks
and rewards of ownership are transferred to our customers (generally dealers and distributors). For the majority of our
sales, this occurs when products are shipped from our manufacturing facilities or delivered to our customers. When
vehicles are shipped to customers or vehicle modifiers on consignment, revenue is recognized when the vehicle is sold to
the ultimate customer.
Income generated from cash and cash equivalents, investments in marketable securities, and other miscellaneous
receivables is reported in Automotive interest income and other non-operating income/(expense), net.
Revenue Recognition — Financial Services Sector
Income generated from cash and cash equivalents, investments in marketable securities, and other miscellaneous
receivables is reported in Financial Services other income/(loss), net.