Introduction
General Motors manufacturer’s different motor vehicle brands and has outlets indifferent countries in the world. It’s one of the most popular brands with a presence in both developed and developing countries due to its reliable vehicles which fit both the rich and the middle class. The financial statements used in this analysis are those of the period ended Dec 31, 2013.
Investment
The financial statements recorded unrealized gains as for-sale-securities. The available for-sale-securities are recorded as losses because a couple of factors are considered when the classification is being made. They are recorded at fair value which also covers losses and taxes paid. Any changes in fair value are recorded as interest income and also as non-operating income. It is also worth noting that the fair value is obtained by comparing the shares with other similar ones in the market. The financial reports reveal that the company reports classified the marketable securities into a number of categories when reporting them at the cash flow records. There are those recorded as for-sale marketable securities and acquisitions which have a value of (6,754) million, trading marketable securities acquisitions having a value of (3,214) million, available for sale marketable securities, liquidations 3,566 million, trading marketable securities, liquidations 6,538 million. This record shows that the company acquired securities worth 9,968 million and sold securities worth 10,104 million. The balance sheet records these marketable securities as both current and non-current assets. Those recorded under the current assets are worth 8,972 million while those under the non-current assets are tallied together with restricted cash amounting to 829 million.
Long-term contracts
The company has lease contacts categorized as operating leases which are recorded under non-current assets. These contracts are signed with car lease companies that lease cars from general motors and then use them in their business activities while paying an agreed amount to the company. The contracts are lengthy that why they are classified under non-current assets category. The contracts are worth $3,383 million.
Deferred tax accounts
Deferred income tax is classified under the category of non-current liabilities. This is a clear indication that the company does not intend to pay the taxes in a lump sum in the near future and had accumulated them over a long period of time. This is mostly caused by the decision of the management to delay tax payments so that it can use that money to fund its expansion activities. This money is then paid later when the company has generated enough money to clear the debt without affecting its operations. The current amount is $13,353 million which is quite a high amount compared to other non-current liabilities.
Pension
The policy of the company is to contribute annually not less than the minimum required by the law and regulations or to pay directly the benefits where appropriate. The company paid $128 in pension to U.S. hourly and salaried workers. Non-U.S. received $886 totaling to $1, 1014. Employer’s contribution in the United States is $393 while the plan participants contributed $29 which summed to $422.
Year ended Dec 31, 2013
| Pension benefits | Other benefits |
| Change in benefit obligations | U.S plans | Non-US Plans | U.S Plans | Non-U.S Plans |
| Beginning benefit obligation | $82,110 | $29,301 | $6,271 | $1,528 |
| Service cost | 298 | 394 | 24 | 13 |
| Interest cost | 2,837 | 1,010 | 217 | 57 |
| Plan participants contributions | – | 4 | 29 | 2 |
| Amendments | – | (4) | – | (4) |
| Actual (gains) losses | (7,661) | (1,009) | (757) | (210) |
| Benefits paid | (5,719) | (1,683) | (422) | (53) |
| Foreign currency translation adjustments | – | (528) | – | (98) |
| Business combinations | – | 128 | – | – |
| Curtailments, settlements and other | (385) | (85) | 252) | 3 |
| Ending benefit obligations | 71,480 | 27,528 | 5,110 | 1,238 |
| Change in plan assets | ||||
| Beginning fair value of plan assets | 68,085 | 15,541 | – | – |
| Actual return on plan assets | 2,107 | 988 | – | – |
| Employer contributions | 128 | 886 | 393 | 51 |
| Plan participants contributions | – | 4 | 29 | 2 |
| Benefits paid | (5,719) | (1,683) | (422) | (53) |
| Foreign currency translation adjustments | – | (692) | – | – |
| Business combinations | – | 26 | – | – |
| Settlements | (435) | (87) | – | – |
| Other | – | 3 | – | – |
| Ending fair value of plan assets | 64,166 | 14,986 | – | – |
| Ending funded status | $(7,314) | $(12,542) | $(5,110) | $(1,238) |
| Amounts recorded in the consolidated balance sheets | ||||
| Non-current assets | – | 137 | – | – |
| Current liabilities | (131) | (379) | (368) | (83) |
| Non-current liabilities | (7,183) | (12,300) | (4,742) | (1,155) |
| Net amount recorded | $(7,314) | $(12,542) | $(1,238) | $(14,025) |
| Amounts recorded in accumulated other comprehensive loss | ||||
| Net actuarial gain(loss) | $4,747 | $(3,379) | $(542) | $47 |
| Net prior service (cost) credit | 38 | (87) | 19 | 91 |
| Total recorded in accumulated other comprehensive loss | $4,785 | $(3,466) | $(523) | $138 |
The following table summarizes the total accumulated benefit obligations (ABO), the fair value for defined benefit pension plans with ABO in excess of plan assets, and the projected benefit obligation (PBO) and fair value of plan assets for defined benefit pension plans with PBO in excess of plan assets.
| ABO | $71,461 | $27,069 |
| Plans with ABO in excess of plan assets | $71,461 | $25,897 |
| ABO | ||
| Fair value of plan assets | $64,166 | $13,663 |
| Plans with PBO in excess of plan assets | ||
| PBO | $71,480 | $26,788 |
| Fair value of plan assets | $64,166 | $14,109 |
The rates used are
| Pension benefits | Other benefits | |||
| Weighted average assumptions used to determine benefit obligations | ||||
| Discount rate | 4.46% | 4.10% | 4.52% | 4.71% |
| Rate of compensation | – | 2.90% | – | 4.21% |
| Weighted average assumptions used to determine net expense | ||||
| Discount rate | 3.59% | 3.69% | 3.69% | 3.97% |
| Expected rate of return on plan assets | 5.77% | 5.70% | – | – |
| Rate of compensation increase | – | 2.77% | 4.50% | 4.21% |
Disclosure of accounting for lease
The report indicates the noncancellable operating leases which have initial terms in excess of one year, primary for property.
| 2014 | 2015 | 2016 | 2017 | 2018 | |
| Minimum commitments | $363 | $290 | $225 | $156 | $132 |
| Sublease income | (52) | (58) | (60) | (59) | (56) |
| Net minimum commitments | $311 | $232 | $165 | $97 | $76 |
Accounting changes and error analysis
The financial reports of the company do not state any change in accounting policy. This is because the mode of reporting and analyzing adopted was the same in the past financial period. There are also no mentioned changes in accounting estimates and in reporting entry.
