Boeing 2009 Annual Report Download - page 75

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Available-for-sale securities include marketable debt and equity securities and Enhanced Equipment
Trust Certificates and are recorded at their fair values, with unrealized gains and losses reported as
part of Accumulated other comprehensive loss on the Consolidated Statements of Financial Position.
Realized gains and losses on marketable securities are recognized based on the cost of securities
using the first-in, first-out method. Realized gains and losses on all other available-for-sale securities
are recognized based on specific identification.
Available-for-sale securities are assessed for impairment quarterly. To determine if an impairment is
other-than-temporary, we consider the duration and severity of the loss position, the strength of the
underlying collateral, the term to maturity, credit rating and our intent to sell. For debt securities that are
deemed other-than-temporarily impaired and there is no intent to sell, impairments are separated into
the amount related to the credit loss, which is recorded in our Consolidated Statements of Operations,
and the amount related to all other factors, which is recorded in Accumulated other comprehensive
loss. For debt securities that are deemed other-than-temporarily impaired and there is an intent to sell,
impairments in their entirety are recorded in our Consolidated Statements of Operations. For equity
securities that are deemed other-than-temporarily impaired, impairments in their entirety are recorded
in our Consolidated Statements of Operations. Payments received on other-than-temporarily impaired
investments are recorded using the cost recovery method.
The equity method of accounting is used to account for investments for which we have the ability to
exercise significant influence, but not control, over an investee. Significant influence is generally
deemed to exist if we have an ownership interest in the voting stock of an investee of between 20%
and 50%.
We classify investment income and loss on our Consolidated Statements of Operations based on
whether the investment is operating or non-operating in nature. Operating investments align
strategically and are integrated with our operations. Earnings from operating investments, including our
share of income or loss from equity method investments, dividend income from certain cost method
investments, and any impairments or gain/loss on the disposition of these investments, are recorded in
Income from operating investments, net. Non-operating investments are those we hold for
non-strategic purposes. Earnings from non-operating investments, including interest and dividends on
marketable securities, and any impairments or gain/loss on the disposition of these investments are
recorded in Other (expense)/income, net.
Derivatives
All derivative instruments are recognized in the financial statements and measured at fair value
regardless of the purpose or intent of holding them. We use derivative instruments to principally
manage a variety of market risks. For derivatives designated as hedges of the exposure to changes in
fair value of the recognized asset or liability or a firm commitment (referred to as fair value hedges), the
gain or loss is recognized in earnings in the period of change together with the offsetting loss or gain
on the hedged item attributable to the risk being hedged. The effect of that accounting is to include in
earnings the extent to which the hedge is not effective in achieving offsetting changes in fair value. For
our cash flow hedges, the effective portion of the derivative’s gain or loss is initially reported in
Shareholders’ equity (as a component of Accumulated other comprehensive loss) and is subsequently
reclassified into earnings in the same period or periods during which the hedged forecasted transaction
affects earnings. The ineffective portion of the gain or loss of a cash flow hedge is reported in earnings
immediately. We also hold certain instruments for economic purposes that are not designated for
hedge accounting treatment. For these derivative instruments, the changes in their fair value are also
recorded in earnings immediately.
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