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107
Notes to Consolidated Financial Statements
International Business Machines Corporation and Subsidiary Companies
($ inmillions)
At December 31, 2014:
Major
Markets
Growth
Markets Total
Financing receivables
Lease receivables $ 5,702 $1,943 $ 7,645
Loan receivables 10,049 4,639 14,687
Ending balance $15,751 $6,581 $22,332
Collectively evaluated for impairment $15,665 $6,156 $21,821
Individually evaluated for impairment $ 86 $ 425 $ 511
Allowance for credit losses
Beginning balance at
January1, 2014
Lease receivables $ 42 $ 80 $ 123
Loan receivables 95 147 242
Total $ 137 $ 228 $ 365
Write-offs (18) (6) (24)
Provision 3 240 243
Other (12) (11) (23)
Ending balance at
December 31, 2014 $ 111 $ 450 $ 561
Lease receivables $ 32 $ 133 $ 165
Loan receivables $ 79 $ 317 $ 396
Collectively evaluated for impairment $ 42 $ 39 $ 81
Individually evaluated for impairment $ 69 $ 411 $ 480
When determining the allowances, financing receivables are
evaluated either on an individual or a collective basis. For indi-
vidually 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,
2015 and 2014.
($ inmillions)
At December 31: 2015 2014
Major markets $ 2 $ 13
Growth markets 63 40
Total lease receivables $ 65 $ 53
Major markets $ 13 $ 27
Growth markets 91 151
Total loan receivables $104 $178
Total receivables $168 $231
Impaired Loans
The company considers any loan with an individually evaluated
reserve as an impaired loan. Depending on the level of impairment,
loans will also be placed on a non-accrual status. The following
tables present impaired client loan receivables at December31,
2015 and 2014.
($ inmillions)
At December 31, 2015:
Recorded
Investment
Related
Allowance
Major markets $ 50 $ 47
Growth markets 297 284
Total $347 $331
($ inmillions)
At December 31, 2014:
Recorded
Investment
Related
Allowance
Major markets $ 54 $ 47
Growth markets 299 293
Total $353 $340
($ inmillions)
For the year ended December 31, 2015:
Average
Recorded
Investment
Interest
Income
Recognized
Interest
Income
Recognized
on Cash
Basis
Major markets $ 51 $0 $—
Growth markets 315 0 —
Total $367 $0 $—
($ 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 $—