Boeing 2012 Annual Report Download - page 113

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101
The fair value of the impaired operating lease equipment is derived by calculating a median collateral value
from a consistent group of third party aircraft value publications. The values provided by the third party
aircraft publications are derived from their knowledge of market trades and other market factors.
Management reviews the publications quarterly to assess the continued appropriateness and consistency
with market trends. Under certain circumstances, we adjust values based on the attributes and condition
of the specific aircraft or equipment, usually when the features or use of the aircraft vary significantly from
the more generic aircraft attributes covered by third party publications, or on the expected net sales price
for the aircraft.
Property, plant and equipment, Other assets, and Acquired intangible assets were valued using an income
approach based on the discounted cash flows associated with the underlying assets. The cost investment
was valued using a market approach based on quoted market prices for related investments.
For Level 3 assets that were measured at fair value on a non-recurring basis during the year ended
December 31, 2012, the following table presents the fair value of those assets as of the measurement
date, valuation techniques and related unobservable inputs of those assets.
Fair
Value
Valuation
Technique(s)
Unobservable
Input
Range
Median or Average
Equipment under operating
leases & Assets held for sale
or re-lease
$75 Market
approach
Aircraft value
publications
$69 - $112(1)
Median $87
Aircraft condition
adjustments
$(18) - $6(2)
Net $(12)
(1) The range represents the sum of the highest and lowest values for all aircraft subject to fair value
measurement, according to the third party aircraft valuation publications that we use in our valuation
process.
(2) The negative amount represents the sum for all aircraft subject to fair value measurement, of all
downward adjustments based on consideration of individual aircraft attributes and condition. The
positive amount represents the sum of all such upward adjustments.
Fair Value Disclosures
The fair values and related carrying values of financial instruments that are not required to be remeasured
at fair value on the Consolidated Statement of Financial Position at December 31 were as follows:
2012 2011
Carrying
Amount
Total Fair
Value Level 1 Level 2 Level 3
Carrying
Amount
Total Fair
Value
Assets
Accounts receivable, net $5,608 $5,642 $5,642 $5,793 $5,690
Notes receivable, net 571 632 632 792 836
Liabilities
Debt, excluding capital
lease obligations (10,231) (12,269) (12,221) ($48) (12,136) (14,099)
The fair value of Accounts receivable is based on current market rates for loans of the same risk and
maturities. The fair values of our variable rate notes receivable that reprice frequently approximate their
carrying amounts. The fair values of fixed rate notes receivable are estimated with discounted cash flow
analysis using interest rates currently offered on loans with similar terms to borrowers of similar credit
quality. The fair value of our debt that is traded in the secondary market is classified as Level 2 and is