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Analyzation of General Motors Financials

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Submitted By cvarnell
Words 3598
Pages 15
Analyzation of General Motors Financials
Prepared by: Cynthia Servison
April 14, 2015

The amount of property and equipment on the balance sheet for the two most recent years are (dollars in millions) $27,743 (2014) and $25,867 (2013). Depreciation expense is (dollars in millions) $4,187 (2014) and $3,959 (2013). Amounts on the cash flow statement for depreciation is $8,067 (2014).
Expenditure incurred on purchase of property, plant and equipment is called capital expenditure. Such an expenditure is capitalized which means it is recorded on the balance sheet instead of writing it off against revenues on income statement. The capitalized cost of an item of property, plant and equipment include, the invoice price of the plant paid to the supplier; the freight paid to bring the plant to the installation site, the installation fees paid to the engineers, the cost incurred on testing the plant minus related proceeds.
The individual components of property and equipment for year end 2014 include (dollars in millions) land at $1,695, buildings and improvements at $5,236, machinery and equipment at $16,788, construction in progress at $4,114, special tools at $7,977, less accumulated depreciation of ($8,067).
GM records property, plant and equipment, including internal use software, at cost. Major improvements that extend useful life or add functionality of property are capitalized. The gross amount of assets under capital leases is included in property, plant and equipment. Expenditures for repairs and maintenance are charged to expense as incurred. They depreciate all depreciable property using the straight-line method. Leasehold improvements are amortized over the period of lease or the life of the asset, whichever is shorter. The amortization of the assets under capital leases is included in depreciation expense. Upon retirement or disposition of

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