1. Briefly describe the companys accounting policy and how the recent adoption of "Leases" (ASU 2016-02) affects the companys financial reporting.

2. How does the company account for equipment on operating leases?

3. What type of vehicles are leased to the customers?

4. How much revenue did the company earn from their lease transactions during the last fiscal year?

5. What depreciation method does the company use on these assets and how does it determine the residual value of the leased assets?

6. What are the net book values of these assets at the end of the fiscal year?

7. How does the company account for its financial lease liability?

8. What are the sources (i.e., types of assets leased) and the ending balances of these financial obligations?

9. How does the company compute interest on these liabilities?

Note 7. Operating Leases Operating Leases Our portfolio of leases primarily consists of real estate office space, manufacturing and warehousing facilities, land and equipment. Certain leases contain escalation clauses and renewal or purchase options, and generally our leases have no residual value guarantees or material covenants. We exclude leases with a term of one year or less from our balance sheet, and do not separate non-lease components from our real estate leases. Rent expense under operating leases was \$294 million, \$317 million and \$354 million in the years ended December 31, 2021, 2020 and 2019. Variable lease costs were insignificant in the years ended December 31, 2021, 2020 and 2019. At December 31, 2021 and 2020, operating lease right of use assets in Other assets were $1.1 billion and $1.0 billion, operating lease liabilities in Accrued liabilities were \$204 million and \$209 million and non-current operating lease liabilities in Other liabilities were $1.0 billion and $969 million. Operating lease right of use assets obtained in exchange for lease obligations were $328 million and \$222 million in the years ended December 31, 2021 and 2020. Our undiscounted future lease obligations related to operating leases having initial terms in excess of one year are \$243 million, \$226 million, \$198 million, \$163 million, \$135 million and \$409 million for the years 2022, 2023, 2024, 2025, 2026 and thereafter, with imputed interest of \$159 million as of December 31,2021 . The weighted average discount rate was 3.5% and 4.0% and the weighted-average remaining lease term was 7.1 years and 7.4 years at December 31, 2021 and 2020. Payments for operating leases included in Net cash provided by (used in) operating activities were \$301 million, \$309 million and \$337 million in the years ended December 31, 2021, 2020 and 2019. Lease agreements that have not yet commenced were $215 million at December 31, 2021. 69 GENERAL MOTORS COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Equipment on Operating Leases Equipment on operating leases primarily consists of leases to retail customers of GM Financial. At December 31, 2021, the estimated residual value of our leased assets at the end of the lease term was \$29.1 billion. Depreciation expense related to Equipment on operating leases, net was $6.1 billion, $7.2 billion and $7.3 billion in the years ended December 31, 2021, 2020 and 2019. The following table summarizes lease payments due to GM Financial on leases to retail customers: Automotive Financing - GM Financial Summary and Outlook We believe that offering a comprehensive suite of financing products will generate incremental sales of our vehicles, drive incremental GM Financial earnings and help support our sales throughout various economic cycles. GM Financial's leasing program is exposed to residual values, which are heavily dependent on used vehicle prices. Used vehicle prices were higher in 2021 compared to 2020 levels, primarily due to low new vehicle inventory. In 2022, we expect used vehicle prices may decrease relative to 2021 levels, but to remain above prepandemic levels, primarily due to sustained low new vehicle inventory. The increase in used vehicle prices resulted in gains on terminations of leased vehicles of $2.0 billion in GM Financial interest, operating and other expenses for the year ended 30 Table of Contents GENERAL MOTORS COMPANY AND SUBSIDIARIES December 31, 2021, and $1.3 billion in the corresponding period in 2020. The following table summarizes the estimated residual value based on GM Financial's most recent estimates and the number of units included in GM Financial Equipment on operating leases, net by vehicle type (units in thousands): GM Financial's penetration of our retail sales in the U.S. was 44% in the year ended December 31,2021 and 45% in the corresponding period in 2020. Penetration levels vary depending on incentive financing programs available and competing third-party financing products in the market. GM Financial's prime loan originations as a percentage of total loan originations in North America was 73% in the year ended December 31, 2021 and 2020. In the year ended December 31, 2021, GM Financial's revenue consisted of leased vehicle income of 67%, retail finance charge income of 29% and commercial finance charge income of 2%. Equipment on Operating Leases Equipment on operating leases, net primarily consists of vehicle leases to retail customers with lease terms of two to five years. We are exposed to changes in the residual values of these assets. The residual values represent estimates of the values of the leased vehicles at the end of the lease agreements and are determined based on 59 Table of Contents GENERAL MOTORS COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) forecasted auction proceeds when there is a reliable basis to make such a determination. Realization of the residual values is dependent on the future ability to market the vehicles under prevailing market conditions. The estimate of the residual value is evaluated over the life of the arrangement and adjustments may be made to the extent the expected value of the vehicle changes. Adjustments may be in the form of revisions to the depreciation rate or recognition of an impairment charge. A lease vehicle asset group is determined to be impaired if an impairment indicator exists and the expected future cash flows, which include estimated residual values, are lower than the carrying amount of the vehicle asset group. If the carrying amount is considered impaired an impairment charge is recorded for the amount by which the carrying amount exceeds fair value of the vehicle asset group. Fair value is determined primarily using the anticipated cash flows, including estimated residual values. In our automotive finance operations when a leased vehicle is returned or repossessed the asset is recorded in Other assets at the lower of amortized cost or net realizable value. Upon disposition a gain or loss is recorded in GM Financial interest, operating and other expenses for any difference between the net book value of the leased asset and the proceeds from the disposition of the asset. Automotive The following table presents debt in our automotive operations: (a) Primarily consists of senior notes. (b) Includes net discount and debt issuance costs of $512 million and $540 million at December 31, 2021 and 2020. (c) Excludes our 364-day, \$2.0 billion facility designated for exclusive use by GM Financial. (d) Includes coupon rates on debt denominated in various foreign currencies and interest free loans. In April 2021, we increased the total borrowing capacity of our five-year, $10.5 billion facility to $11.2 billion and extended the termination date for a $9.9 billion portion of the five-year facility by three years, now set to mature on April 18,2026 . The termination date of April 18, 2023 for the remaining portion of the five-year facility remains unchanged. We also renewed and increased the total borrowing capacity of our three-year, $4.0 billion facility to $4.3 billion, which now matures on April 7 , 2024 , and renewed our 364-day, \$2.0 billion facility allocated for exclusive use by GM Financial, which now matures on April 6, 2022. We also terminated a separate 364-day, \$2.0 billion revolving credit facility, entered into in May 2020 . Additionally, the prior restrictions on share repurchases and dividends on our common shares were removed upon entrance into the renewed three-year, $4.3 billion facility. In September 2021, we repaid $450 million of our floating rate senior unsecured debt upon maturity. In December 2021 , we terminated our three-year, \$2.0 billion transformation facility that was scheduled to mature in January 2022