Ford 2010 Annual Report Download - page 89

Notes to the Financial Statements
Ford Motor Company | 2010 Annual Report 87
NOTE 2. SUMMARY OF ACCOUNTING POLICIES (Continued)
Government Grants and Loan Incentives
We receive incentives from domestic and foreign governments in the form of tax rebates or credits, loans and grants.
Incentives are recorded in the financial statements in accordance with their purpose, either as a reduction of expense or a
reduction of the cost of the capital investment. The benefit of these incentives is recorded when performance is complete
and all conditions as specified in the agreement are fulfilled.
Selected Other Costs
Freight, engineering, and research and development costs are included in Automotive cost of sales; advertising costs
are included in Selling, administrative and other expenses. Freight costs on goods shipped and advertising costs are
expensed as incurred. Engineering, research and development costs are expensed as incurred when performed
internally or performed by a supplier when reimbursement is guaranteed. Engineering, research and development, and
advertising expenses were as follows (in billions):
2010
20102010
2010
2009
20092009
2009
2008 20082008
2008
Engineering, research and development................................................................
................................
$ 5.0 $ 4.7 $ 7.1
Advertising................................................................................................
................................
3.9 3.2 4.5
Presentation of Sales and Sales-Related Taxes
We collect and remit taxes assessed by different governmental authorities that are both imposed on and concurrent
with a revenue-producing transaction between us and our customers. These taxes may include, but are not limited to,
sales, use, value-added, and some excise taxes. We report the collection of these taxes on a net basis (excluded from
revenues).
NOTE 3. ACCOUNTING STANDARDS ISSUED BUT NOT YET ADOPTED
Financial Services – Insurance. In October 2010, the Financial Accounting Standards Board ("FASB") issued a new
standard addressing the deferral of acquisition costs within the insurance industry. The new standard modifies which
types of costs can be capitalized in the acquisition and renewal of insurance contracts. The standard is effective for us as
of January 1, 2012. We do not expect this standard to have a material impact on our financial condition, results of
operations, and financial statement disclosures.
Business Combinations. In December 2010, the FASB issued a new standard addressing the disclosure of
supplemental pro forma information for business combinations that occur during the current year. The new standard
requires public entities that present comparative financial statements to disclose the revenue and earnings of the
combined entity as though the business combination(s) that occurred during the current year had occurred as of the
beginning of the prior annual reporting period. The standard is effective for us as of January 1, 2011 and we do not
expect it will have a material impact on our financial condition, results of operations, and financial statement disclosures.
Exposure Drafts. As of December 31, 2010, the FASB issued several exposure drafts proposing new accounting
guidance for financial instruments, presentation of the statement of comprehensive income, revenue recognition, balance
sheet presentation, fair value measurements, and leases. Although the proposed standards are subject to re-
deliberations and finalization by the FASB, if adopted as proposed, these standards could require material changes to our
financial condition, results of operations, and financial statement disclosures.