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GM Annual Report Analysis

GM Annual Report Analysis

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.

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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 benefitsOther benefits
Change in benefit obligationsU.S plansNon-US PlansU.S PlansNon-U.S Plans
Beginning benefit obligation$82,110$29,301$6,271$1,528
Service cost2983942413
Interest cost2,8371,01021757
Plan participants contributions-4292
Amendments-(4)-(4)
Actual (gains) losses(7,661)(1,009)(757)(210)
Benefits paid(5,719)(1,683)(422)(53)
Foreign currency translation adjustments-(528)-(98)
Business combinations-128--
Curtailments, settlements and other(385)(85)252)3
Ending benefit obligations71,48027,5285,1101,238
Change in plan assets    
Beginning fair value of plan assets68,08515,541--
Actual return on plan assets2,107988--
Employer contributions12888639351
Plan participants contributions-4292
Benefits paid(5,719)(1,683)(422)(53)
Foreign currency translation adjustments-(692)--
Business combinations-26--
Settlements(435)(87)--
Other-3--
Ending fair value of plan assets64,16614,986--
Ending funded status$(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) credit38(87)1991
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 benefitsOther benefits
Weighted average assumptions used to determine benefit obligations    
Discount rate4.46%4.10%4.52%4.71%
Rate of compensation-2.90%-4.21%
Weighted average assumptions used to determine net expense    
Discount rate3.59%3.69%3.69%3.97%
Expected rate of return on plan assets5.77%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.

 20142015201620172018
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.

 

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