Ford 2014 Annual Report Download - page 116

FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1. PRESENTATION
For purposes of this report, “Ford,” the “Company,” “we,” “our,” “us” or similar references mean Ford Motor Company,
our consolidated subsidiaries and our consolidated VIEs of which we are the primary beneficiary, unless the context
requires otherwise.
We prepare our financial statements in accordance with generally accepted accounting principles in the United States
(“GAAP”). We present the financial statements on both a consolidated basis and on a sector basis for our Automotive and
Financial Services sectors. The additional information provided in the sector statements enables the reader to better
understand the operating performance, financial position, cash flows, and liquidity of our two very different businesses.
We eliminate all intercompany items and transactions in the consolidated and sector balance sheets. In certain
circumstances, presentation of these intercompany eliminations or consolidated adjustments differ between the
consolidated and sector financial statements. These line items are reconciled below under “Reconciliations between
Consolidated and Sector Financial Statements” or in the related financial statements and footnotes.
We reclassified certain prior year amounts in our consolidated financial statements to conform to current year
presentation.
Changes in Accounting
Disability Accounting. We provide medical, life, and income benefits to hourly and salary employees when they
become disabled. As of January 1, 2014, we changed our accounting policy for these benefits from an event-driven
model to a service-accrual model, such that our obligation now includes an estimated cost to be incurred for individuals
who are disabled at the time of measurement (which was the amount recorded under our previous policy) as well as an
amount that considers the probability that active employees will become disabled in the future. We believe this change in
accounting method is preferable because it better aligns the recognition of expense with the periods in which the
Company receives the benefit of the employees’ services, and will allow for better comparability with the method used by
other companies in our industry.
We have retroactively applied this change in accounting method to all prior period amounts. As of
December 31, 2011, the cumulative effect of the change decreased Total equity by $250 million.
The cumulative effect of this change on our consolidated balance sheet at December 31 was as follows (in millions):
Revised 2013
As Originally
Reported 2013
Effect of
change
Deferred income taxes $ 13,468 $13,315 $153
Other liabilities and deferred revenue 40,886 40,462 424
Total equity 26,145 26,416 (271)
Revised 2012
As Originally
Reported 2012
Effect of
change
Deferred income taxes $ 15,350 $15,185 $165
Other liabilities and deferred revenue 48,727 48,259 468
Total equity 15,686 15,989 (303)
The effect of this change was immaterial to our consolidated income statement and consolidated statement of cash
flows for the years ended December 31, 2014, 2013, and 2012.
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