GE 2005 Annual Report Download - page 82

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NBC Universal, Inc. (NBC Universal) records broadcast and cable television advertising sales when
advertisements are aired, net of provision for any viewer shortfalls (make goods). We record sales from theatrical
distribution of films as the films are exhibited; sales of home videos, net of a return provision, when the videos are
shipped and available for sale by retailers; fees from cable and satellite operators when services are provided; and
licensing of film and television programming when we make the material available for airing.
GECS revenues from services (earned income)
We use the interest method to recognize income on all loans. Interest on loans includes origination, commitment and
other non-refundable fees related to funding (recorded in earned income on the interest method). We stop accruing
interest at the earlier of the time at which collection of an account becomes doubtful or the account becomes 90 days
past due. We recognize interest income on nonearning loans either as cash is collected or on a cost-recovery basis as
conditions warrant. We resume accruing interest on nonearning, non-restructured commercial loans only when (a)
payments are brought current according to the loan’ s original terms and (b) future payments are reasonably assured.
When we agree to restructured terms with the borrower, we resume accruing interest only when reasonably assured
that we will recover full contractual payments, and such loans pass underwriting reviews equivalent to those applied
to new loans. We resume accruing interest on nonearning consumer loans when the customer’ s account is less than
90 days past due.
We record financing lease income on the interest method to produce a level yield on funds not yet
recovered. Estimated unguaranteed residual values at the date of lease inception represent our initial estimates of the
fair value of the leased assets at the expiration of the lease and are based primarily on independent appraisals, which
are updated periodically. Guarantees of residual values by unrelated third parties are considered part of minimum
lease payments. Significant assumptions we use in estimating residual values include estimated net cash flows over
the remaining lease term, results of future remarketing, and future component part and scrap metal prices,
discounted at an appropriate rate.
We recognize operating lease income on a straight-line basis over the terms of underlying leases.
Fees include commitment fees related to loans that we do not expect to fund and line-of-credit fees. We
record these fees in earned income on a straight-line basis over the period to which they relate. We record
syndication fees in earned income at the time related services are performed, unless significant contingencies exist.
See the Investment securities and GECS investment contracts, insurance liabilities and insurance annuity
benefits sections of this note for a description of accounting policies for these activities.
Depreciation and amortization
The cost of GE manufacturing plant and equipment is depreciated over its estimated economic life. U.S. assets are
depreciated using an accelerated method based on a sum-of-the-years digits formula; non-U.S. assets are depreciated
on a straight-line basis.
The cost of GECS equipment leased to others on operating leases is amortized on a straight-line basis to
estimated residual value over the lease term or over the estimated economic life of the equipment. See note 15.