Boeing 2008 Annual Report Download - page 81

Each quarter we review customer credit ratings, published historical credit default rates for different
rating categories, and multiple third party aircraft value publications as a basis to validate the
reasonableness of the allowance for losses on receivables. There can be no assurance that actual
results will not differ from estimates or that the consideration of these factors in the future will not result
in an increase or decrease to the allowance for losses on receivables.
Supplier Penalties
We record an accrual for supplier penalties when an event occurs that makes it probable that a
supplier penalty will be incurred and the amount is reasonably estimable. Until an event occurs, we
fully anticipate accepting all products procured under production-related contracts.
Guarantees
We account for guarantees in accordance with FIN 45, Guarantor’s Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others. We record a
liability in Accounts payable and other liabilities for the fair value of guarantees that are issued or
modified after December 31, 2002. For a residual value guarantee where we received a cash premium,
the liability is equal to the cash premium received at the guarantee’s inception. For credit and
performance guarantees, the liability is equal to the present value of the expected loss. We determine
the expected loss by multiplying the creditor’s default rate by the guarantee amount reduced by the
expected recovery, if applicable, for each future period the credit or performance guarantee will be
outstanding. If at inception of a guarantee, we determine there is a probable related contingent loss,
we will recognize a liability for the greater of (a) the fair value of the guarantee as described above or
(b) the probable contingent loss amount.
Note 2 – Goodwill and Acquired Intangibles
Changes in the carrying amount of goodwill by reportable segment for the years ended December 31,
2008, 2007 and 2006 were as follows:
Commercial
Airplanes
Boeing
Military
Aircraft
Network
and Space
Systems
Global
Services
and Support Total
Balance at January 1, 20061$ 280 $612 $ 885 $147 $1,924
Aviall acquisition21,014 41 1,055
Other 71 (3) 68
Balance at December 31, 2006 $1,365 $612 $ 882 $188 $3,047
Goodwill adjustments (25) (1) (26)
Acquisition 60 60
Balance at December 31, 2007 $1,400 $612 $ 882 $187 $3,081
Goodwill adjustments (35) (35)
Acquisitions384 248 201 68 601
Balance at December 31, 2008 $1,449 $860 $1,083 $255 $3,647
1Effective January 1, 2008 and 2007, certain programs were realigned among IDS segments. Prior
year amounts have been recast for segment realignments.
2On September 20, 2006, we acquired all of the outstanding shares of Aviall, Inc. (Aviall) for
$1,780. The acquisition of Aviall was accounted for under the purchase method of accounting. The
purchase price was allocated to the net assets acquired based on their fair values and finalized in
the fourth quarter of 2006.
3The increase in goodwill is primarily the result of nine acquisitions during 2008. The purchase
price allocations for five acquisitions were finalized during 2008. The remaining four acquisitions
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