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Notes to Consolidated Financial Statements
International Business Machines Corporation and Subsidiary Companies
111
($ in millions)
At December 31, 2013:
Major
Markets
Growth
Markets Tota l
Financing receivables
Lease receivables $ 6,796 $2,200 $ 8,996
Loan receivables 10,529 4,012 14,542
Ending balance $17,325 $6,212 $23,537
Collectively evaluated for impairment $17,206 $6,013 $23,219
Individually evaluated for impairment $ 119 $ 199 $ 318
Allowance for credit losses:
Beginning balance at
January1, 2013
Lease receivables $ 59 $ 55 $ 114
Loan receivables 121 84 204
Total $ 180 $ 138 $ 318
Write-offs (23) (10) (33)
Provision (21) 105 84
Other 1 (6) (5)
Ending balance at
December 31, 2013 $ 137 $ 228 $ 365
Lease receivables $ 42 $ 80 $ 123
Loan receivables $ 95 $ 147 $ 242
Collectively evaluated for impairment $ 45 $ 48 $ 93
Individually evaluated for impairment $ 93 $ 179 $ 272
When determining the allowances, financing receivables are eval-
uated either on an individual or a collective basis. For individually
evaluated receivables, the company determines the expected
cash flow for the receivable and calculates an estimate of the
potential loss and the probability of loss. For those accounts
in which the loss is probable, the company records a specific
reserve. In addition, the company records an unallocated reserve
that is calculated by applying a reserve rate to its different portfo-
lios, excluding accounts that have been specifically reserved. This
reserve rate is based upon credit rating, probability of default, term,
characteristics (lease/loan) and loss history.
Financing Receivables on Non-Accrual Status
The following table presents the recorded investment in financing
receivables which were on non-accrual status at December31,
2014 and 2013.
($ in millions)
At December 31: 2014 2013
Major markets $ 13 $ 25
Growth markets 40 34
Total lease receivables $ 53 $ 59
Major markets $ 27 $ 40
Growth markets 151 92
Total loan receivables $178 $132
Total receivables $231 $191
Impaired Loans
The company considers any loan with an individually evaluated
reserve as an impaired loan. Depending on the level of impairment,
loans will also be placed on a non-accrual status. The following
tables present impaired client loan receivables at December31,
2014 and 2013.
($ in millions)
At December 31, 2014:
Recorded
Investment
Related
Allowance
Major markets $ 54 $ 47
Growth markets 299 293
Total $353 $340
($ in millions)
At December 31, 2013:
Recorded
Investment
Related
Allowance
Major markets $ 79 $ 67
Growth markets 122 116
Total $201 $183
($ in millions)
For the year ended December 31, 2014:
Average
Recorded
Investment
Interest
Income
Recognized
Interest
Income
Recognized
on Cash
Basis
Major markets $ 68 $0 $—
Growth markets 208 0 —
Total $276 $0 $—
($ in millions)
For the year ended December 31, 2013:
Average
Recorded
Investment
Interest
Income
Recognized
Interest
Income
Recognized
on Cash
Basis
Major markets $ 76 $0 $0
Growth markets 97 0 0
Total $173 $0 $0