Revenues are recognized by the companies in the United States mostly in accordance with the US GAAP. Revenues from the automotive business segment of Ford Motors are generally generated through sales of automobiles and its accessories. Revenues are recorded in the books of account of the company only after the risks and rewards of ownership related to the products are completely transferred to its customers. The customers of the company mainly include distributors and dealers of automobiles. The vehicles which are sold by the company to various rental companies as operating leases.
These types of assets owned by the company are subject to guaranteed repurchase options. The difference between the amounts of guaranteed repurchase and the proceeds from the sale of vehicles is recognized as automotive revenues over a period of around eight months utilizing the straight-line method. The revenues generated through the company’ s investments in marketable securities are recognized as non-operative income of the company. Various assets of the company in the form of cash and cash equivalents like time deposits, etc. are valued at par value.
prices of the marketable securities owned by the company are derived mostly from different pricing services. In the absence of pricing data the company values its marketable securities using the various standard valuation models and is based on the income approach. The notes receivables are first recorded at fair value and then evaluated at amortized cost. All the inventories of the company are recorded at their costs or market value, whichever is lower. The new assets that are acquired by Ford Motor are capitalized only if it is expected those assets can be utilized for more than one year and its acquisition cost is greater than $2,500.
The equipment and properties of Ford Motor are depreciated using the straight-line depreciation method over the total estimated useful life corresponding to each of the assets.
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