2.2.0.25falsefalse001650 - Disclosure - Impairment of Long-Lived Assetstruefalsefalse1falsefalseUSDfalsefalse1/1/2010 - 12/31/2010
USD ($)
USD ($) / shares
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<a id="xbrlnote15" name="xbrlnote15"
style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NOTE
15. IMPAIRMENT OF LONG-LIVED ASSETS</a>
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We monitor our asset groups for conditions that may indicate
a potential impairment of long-lived assets. These
conditions include current-period operating losses combined
with a history of losses and a projection of continuing
losses, and significant negative industry or economic
trends. When these conditions exist, we test for
impairment. An impairment charge is recognized for
the amount by which the carrying value of the asset group
exceeds its estimated fair value.
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During the second quarter of 2008, higher fuel prices and the
weak economic climate in the United States and Canada
resulted in a more pronounced and accelerated shift in
consumer preferences away from full-size trucks and
traditional sport utility vehicles ("SUVs") to smaller, more
fuel-efficient vehicles. This shift in consumer
preferences combined with lower-than-anticipated U.S.
industry demand and greater-than-anticipated escalation of
commodity costs resulted in impairment charges related to
Ford North America's long-lived assets and Ford Credit's
operating lease portfolio.
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Automotive Sector
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<font style="DISPLAY: inline; FONT-STYLE: italic">North
America Long-Lived Assets. </font>Based upon the
financial impact of rapidly-changing U.S. market conditions
during the second quarter of 2008, we projected a decline in
net cash flows for the Ford North America
segment. As a result, in the second quarter of
2008 we tested the long-lived assets for impairment and
recorded in <font
style="DISPLAY: inline; FONT-STYLE: italic">Automotive cost
of sales</font> a pre-tax charge of $5.3 billion,
representing the amount by which the carrying value of the
assets exceeded the estimated fair value. The fair
value measurement used to determine the impairment was based
on the income approach, which utilized cash flow projections
consistent with the most recent Ford North America business
plan approved by our Board of Directors, a terminal value,
and a discount rate equivalent to a market participant's
weighted average cost of capital.
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The table below describes the significant components of the
second quarter 2008 long-lived asset impairment
(in millions):
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style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">
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style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; PADDING-BOTTOM: 2px">
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style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold; PADDING-BOTTOM: 2px">
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style="DISPLAY: block; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt; TEXT-INDENT: 0pt; text-align: center">
Ford North America
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style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold; PADDING-BOTTOM: 2px; TEXT-ALIGN: left">
</td>
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<tr bgcolor="#CCEEFF">
<td align="left" valign="bottom" width="87%">
<div
style="DISPLAY: block; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 0pt; TEXT-INDENT: -9pt; text-align: left">
Land<font style="MARGIN-LEFT: 12pt"> </font>
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<td valign="bottom" width="2%"
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">
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style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; TEXT-ALIGN: left">
$
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<td valign="bottom" width="9%"
style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; TEXT-ALIGN: right">
<font style="MARGIN-LEFT: 12pt"> </font>-
</td>
<td valign="bottom" width="1%"
style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; TEXT-ALIGN: left">
</td>
</tr>
<tr bgcolor="white">
<td align="left" valign="bottom" width="87%">
<div
style="DISPLAY: block; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 0pt; TEXT-INDENT: -9pt; text-align: left">
Buildings and land improvements<font
style="MARGIN-LEFT: 12pt"> </font>
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style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">
</td>
<td valign="bottom" width="1%"
style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; TEXT-ALIGN: left">
</td>
<td valign="bottom" width="9%"
style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; TEXT-ALIGN: right">
<font style="MARGIN-LEFT: 21pt"> </font>698
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style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; TEXT-ALIGN: left">
</td>
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<td align="left" valign="bottom" width="87%">
<div
style="DISPLAY: block; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 0pt; TEXT-INDENT: -9pt; text-align: left">
Machinery, equipment and other<font
style="MARGIN-LEFT: 12pt"> </font>
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</td>
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style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">
</td>
<td valign="bottom" width="1%"
style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; TEXT-ALIGN: left">
</td>
<td valign="bottom" width="9%"
style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; TEXT-ALIGN: right">
<font style="MARGIN-LEFT: 9.85pt"> </font>2,833
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style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; TEXT-ALIGN: left">
</td>
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<td align="left" valign="bottom" width="87%"
style="PADDING-BOTTOM: 2px">
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Special tools<font
style="MARGIN-LEFT: 12pt"> </font>
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style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; PADDING-BOTTOM: 2px">
</td>
<td valign="bottom" width="1%"
style="BORDER-BOTTOM: black 2px solid; DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; TEXT-ALIGN: left">
</td>
<td valign="bottom" width="9%"
style="BORDER-BOTTOM: black 2px solid; DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; TEXT-ALIGN: right">
<font style="MARGIN-LEFT: 9.85pt"> </font><font
style="DISPLAY: inline">1,769</font>
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style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; PADDING-BOTTOM: 2px; TEXT-ALIGN: left">
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Total<font style="MARGIN-LEFT: 12pt"> </font>
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style="BORDER-BOTTOM: black 4px double; DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; TEXT-ALIGN: left">
$
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5,300
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Financial Services Sector
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<font
style="DISPLAY: inline; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Certain
Vehicle Line Operating Leases. </font>The shift in
consumer preferences combined with a weak economic climate
caused a significant reduction in auction values, in
particular for used full-size trucks and traditional
SUVs. As a result, in the second quarter of 2008
we tested Ford Credit's operating leases in its North America
segment for impairment and recorded a pre-tax impairment
charge in <font
style="DISPLAY: inline; FONT-STYLE: italic">Selling,
administrative and other expenses</font> on our consolidated
statement of operations and in <font
style="DISPLAY: inline; FONT-STYLE: italic">Financial
Services depreciation</font> on our sector statement of
operations of $2.1 billion, representing the amount by
which the carrying value of certain vehicle lines in Ford
Credit's lease portfolio exceeded the estimated fair
value. The fair value used to determine the
impairment was based on the income approach and was measured
by discounting the contractual payments and estimated auction
proceeds. The discount rate reflected hypothetical
market assumptions regarding borrowing rates, credit loss
patterns, and residual value risk.
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<br />
</div>
</div></div></div></div>NOTE
15. IMPAIRMENT OF LONG-LIVED ASSETS
We monitor our asset groups for conditions that may indicate
afalsefalsefalsefalsefalseOtherus-types:textBlockItemTypestringThe charge against earnings resulting from the aggregate write down of all assets from their carrying value to their fair value.No authoritative reference available.falsefalse12Impairment of Long-Lived AssetsUnKnownUnKnownUnKnownUnKnownfalsetrue
