Working on a final paper evaluating General Motors Co, corporate performance. Attached is the outline of the assignment along with GM financial annual statement.

Evaluation of Corporate Performance The Final Paper will involve applying the concepts learned in class to an analysis of a company using data from its annual report. Using the concepts from this course, you will analyze the strengths and weaknesses of the company and write a report either recommending or not recommending purchase of the company stock. Research Tip: The \"Mergent\" database in the Ashford University Library contains company profiles and financial information for publicly traded companies and their competitors. To access this database enter the Ashford Library and select \"Find Articles and More\" in the top menu panel. Next, select \"Databases AZ\" and go to section \"M\" for \"Mergent\". For help with using Mergent, use Mergent Online Quick Tips. For help with reading an annual report access this handy guide (Links to an external site.)Links to an external site. from Money Chimp. The completed report should include: An introduction to the company, including background information. A complete and thorough financial statement review. Pro Forma financial statements (Balance Sheet and Income Statement) for the next fiscal year, assuming a 10 percent growth rate in sales and Cost of Goods Sold (COGS) for the next year. Complete ratio analysis for the last fiscal year using at least two ratios from each of the following categories: o Liquidity o Financial leverage o Asset management o Profitability o Market value o Debt o PerShare o Measures of relative value (P/E, P/B) o Activity o Cash Flow A calculation of Return on Equity (ROE) using the DuPont system. Assessment of management performance by calculating Economic Value Added (EVA). A synopsis of your findings, including your recommendations and rationale for whether or not to purchase stock from this company. Evaluate the financial risks associated with operating internationally. If your chosen company does not operate internationally, evaluate what the financial risks could be if they were to expand internationally. The paper Must be eight to ten doublespaced pages in length (not including title and references pages) and formatted according to APA style as outlined in the Ashford Writing Center (Links to an external site.)Links to an external site.. Must include a separate title page with the following: o Title of paper o Student's name o Course name and number o Instructor's name o Date submitted Must begin with an introductory paragraph that has a succinct thesis statement. Must address the topic of the paper with critical thought. Must end with a conclusion that reaffirms your thesis. Must use at least five scholarly sources, such as the textbook, industry reports, and articles from the Ashford University library to support your findings and recommendations. Must document all sources in APA style as outlined in the Ashford Writing Center. Must include a separate references page that is formatted according to APA style as outlined in the Ashford Writing Center. Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM General Motors Company, its Directors, and Stockholders: We have audited the accompanying Consolidated Balance Sheets of General Motors Company and subsidiaries (the "Company") as of December 31, 2016 and 2015, and the related Consolidated Statements of Income, Comprehensive Income, Cash Flows, and Equity for each of the three years in the period ended December 31, 2016. We also have audited the Company's internal control over financial reporting as of December 31, 2016, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company's management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on these financial statements and an opinion on the Company's internal control over financial reporting based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provides a reasonable basis for our opinions. A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements. Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of General Motors Company and subsidiaries as of December 31, 2016 and 2015, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2016, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2016, based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. /s/ DELOITTE & TOUCHE LLP Detroit, Michigan February 7, 2017 1 Table of Contents GENERAL MOTORS COMPANY AND SUBSIDIARIES Item 8. Financial Statements and Supplementary Data CONSOLIDATED INCOME STATEMENTS (In millions, except per share amounts) Years Ended December 31, 2015 2014 2016 Net sales and revenue Automotive $ GM Financial 156,849 $ 145,922 $ 151,092 9,531 6,434 4,837 166,380 152,356 155,929 136,333 128,321 138,082 8,792 5,733 4,039 11,710 13,405 12,158 120 156,835 147,459 154,399 9,545 4,897 1,530 Automotive interest expense 572 443 403 Interest income and other non-operating income, net (Note 18) 429 621 823 Total net sales and revenue Costs and expenses Automotive cost of sales GM Financial interest, operating and other expenses Automotive selling, general and administrative expense Goodwill impairment charges Total costs and expenses Operating income Gain on extinguishment of debt (Note 13) Equity income (Note 7) Income before income taxes 449 202 2,282 2,194 2,094 4,246 11,684 7,718 Income tax expense (benefit) (Note 16) 2,416 (1,897) Net income 9,268 9,615 159 72 Net (income) loss attributable to noncontrolling interests 228 4,018 (69) Net income attributable to stockholders $ 9,427 $ 9,687 $ 3,949 Net income attributable to common stockholders $ 9,427 $ 9,687 $ 2,804 6.12 $ 6.11 $ Earnings per share (Note 20) Basic Basic earnings per common share $ Weighted-average common shares outstanding 1,540 1,586 1.75 1,605 Diluted Diluted earnings per common share $ Weighted-average common shares outstanding 6.00 $ 1,570 5.91 $ 1,640 1.65 1,687 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In millions) Years Ended December 31, 2015 2014 2016 Net income $ 9,268 $ 9,615 $ 4,018 Other comprehensive income (loss), net of tax (Note 19) Foreign currency translation adjustments and other (384) Defined benefit plans (969) Other comprehensive income (loss), net of tax (955) (1,353) Comprehensive income (loss) 7,915 Comprehensive (income) loss attributable to noncontrolling interests 218 Comprehensive income (loss) attributable to stockholders $ 8,133 Reference should be made to the notes to consolidated financial statements. 2 (478) 1,011 (4,505) 56 (4,983) 9,671 (965) 53 $ 9,724 (46) $ (1,011) Table of Contents GENERAL MOTORS COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In millions, except per share amounts) December 31, 2016 December 31, 2015 $ $ ASSETS Current Assets Cash and cash equivalents Marketable securities (Note 3) Accounts and notes receivable (net of allowance of $303 and $327) GM Financial receivables, net (Note 4; Note 11 at VIEs) Inventories (Note 5) Equipment on operating leases, net (Note 6) Other current assets (Note 3; Note 11 at VIEs) Total current assets Non-current Assets GM Financial receivables, net (Note 4; Note 11 at VIEs) Equity in net assets of nonconsolidated affiliates (Note 7) Property, net (Note 8) Goodwill and intangible assets, net (Note 10) GM Financial equipment on operating leases, net (Note 6; Note 11 at VIEs) Deferred income taxes (Note 16) Other assets (Note 3; Note 11 at VIEs) Total non-current assets Total Assets LIABILITIES AND EQUITY Current Liabilities Accounts payable (principally trade) Short-term debt and current portion of long-term debt (Note 13) Automotive GM Financial (Note 11 at VIEs) Accrued liabilities (Note 12) Total current liabilities Non-current Liabilities Long-term debt (Note 13) Automotive GM Financial (Note 11 at VIEs) Postretirement benefits other than pensions (Note 14) Pensions (Note 14) Other liabilities (Note 12) Total non-current liabilities Total Liabilities Commitments and contingencies (Note 15) Equity (Note 19) Common stock, $0.01 par value Additional paid-in capital Retained earnings Accumulated other comprehensive loss Total stockholders' equity Noncontrolling interests Total Equity Total Liabilities and Equity 12,960 11,841 9,638 22,065 13,788 1,896 4,015 76,203 $ 20,724 8,996 35,820 6,259 34,526 35,092 4,070 145,487 221,690 $ 18,500 9,201 31,229 5,947 20,172 36,860 3,021 124,930 194,338 $ 26,961 $ 24,062 $ 1,167 27,861 29,192 85,181 817 18,745 27,593 71,217 9,585 46,015 5,803 17,951 13,080 92,434 177,615 7,948 35,601 5,685 20,911 12,653 82,798 154,015 15 26,983 26,168 (9,330) 43,836 239 44,075 221,690 $ 15 27,607 20,285 (8,036) 39,871 452 40,323 194,338 Reference should be made to the notes to consolidated financial statements. 3 15,238 8,163 8,337 18,051 13,764 2,783 3,072 69,408 Table of Contents GENERAL MOTORS COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) 2016 Cash flows from operating activities Net income Depreciation, amortization and impairment charges Foreign currency remeasurement and transaction losses Undistributed earnings of nonconsolidated affiliates, net Pension contributions and OPEB payments Pension and OPEB (income) expense, net Gains on extinguishment of debt Provision (benefit) for deferred taxes Change in other operating assets and liabilities (Note 24) Other operating activities Net cash provided by operating activities Cash flows from investing activities Expenditures for property Available-for-sale marketable securities, acquisitions Trading marketable securities, acquisitions Available-for-sale marketable securities, liquidations Trading marketable securities, liquidations Acquisition of companies/investments, net of cash acquired Purchases of finance receivables, net Principal collections and recoveries on finance receivables Purchases of leased vehicles, net Proceeds from termination of leased vehicles Other investing activities Net cash used in investing activities Cash flows from financing activities Net increase in short-term debt Proceeds from issuance of debt (original maturities greater than three months) Payments on debt (original maturities greater than three months) Payments to purchase stock Dividends paid (including charge related to redemption of Series A Preferred Stock) Other financing activities Net cash provided by financing activities Effect of exchange rate changes on cash, cash equivalents and restricted cash Net decrease in cash, cash equivalents and restricted cash Cash, cash equivalents and restricted cash at beginning of period Cash, cash equivalents and restricted cash at end of period Significant Non-cash Investing and Financing Activity Non-cash property additions Non-cash business acquisition (Note 9) $ $ $ $ Years Ended December 31, 2015 2014 9,268 $ 10,408 358 (15) (3,465) (553) 1,886 (438) (904) 16,545 4,018 7,238 437 (301) (1,315) 439 (202) (574) 247 74 10,061 (9,542) (15,182) (262) 10,871 872 (809) (17,869) 13,172 (19,624) 2,557 173 (35,643) (7,874) (8,113) (1,250) 8,463 1,758 (928) (17,495) 11,726 (15,158) 1,096 65 (27,710) (7,091) (7,636) (1,518) 6,874 1,881 (53) (14,744) 10,860 (4,776) 533 311 (15,359) 798 45,141 (23,815) (2,500) (2,368) (117) 17,139 (213) (2,172) 17,332 15,160 $ 1,128 35,679 (17,256) (3,520) (2,242) (103) 13,686 (1,524) (3,857) 21,189 17,332 $ 391 31,373 (19,524) (3,277) (3,165) (123) 5,675 (1,230) (853) 22,042 21,189 4,765 290 $ Reference should be made to the notes to consolidated financial statements. 4 9,615 $ 8,017 829 (147) (1,600) 321 (449) (2,757) (2,025) (113) 11,691 4,676 $ 3,313 Table of Contents GENERAL MOTORS COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EQUITY (In millions) Common Stockholders' Series A Preferred Stock $ Retained Earnings $ 15 $ 28,780 $ 13,816 Net income 3,949 Other comprehensive loss Balance at January 1, 2014 Redemption and cancellation of Series A Preferred Stock 3,109 Common Stock Additional Paid-in Capital (3,109) Accumulated Other Comprehensive Loss $ Noncontrolling Interests Total Equity (3,113) $ 567 69 4,018 (23) (4,983) (4,960) $ 43,174 (3,109) Purchase of common stock (85) (83) (168) Exercise of common stock warrants 1 38 39 Stock based compensation 206 (17) 189 Cash dividends paid on Series A Preferred Stock and charge related to redemption of Series A Preferred Stock (1,160) (1,160) Cash dividends paid on common stock (1,928) (1,928) Dividends declared or paid to noncontrolling interests (73) (73) Other (2) 27 25 16 28,937 14,577 567 36,024 Net income 9,687 (72) 9,615 Other comprehensive income 37 19 Purchase of common stock (1) Exercise of common stock warrants 46 46 Stock based compensation 369 (31) 338 Cash dividends paid on common stock (2,174) Dividends declared or paid to noncontrolling interests (75) Other Balance at December 31, 2015 15 27,607 20,285 Net income 9,427 Other comprehensive loss Issuance of common stock Purchase of common stock Exercise of common stock warrants 89 Stock based compensation 317 Cash dividends paid on common stock (2,337) Dividends declared or paid to noncontrolling interests (31) Other 36 36 15 $ 26,983 $ 26,168 (9,330) $ 239 $ 44,075 Balance at December 31, 2014 Balance at December 31, 2016 $ $ (1,745) 290 (1,320) (8,073) (1,774) (8,036) (1,294) (2,174) (75) 13 13 452 40,323 (159) 9,268 (59) (1,353) 89 (27) 290 (1,180) $ Reference should be made to the notes to consolidated financial statements. 5 56 (3,520) 290 (2,500) (2,337) (31) Table of Contents GENERAL MOTORS COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1. Nature of Operations and Basis of Presentation General Motors Company was incorporated as a Delaware corporation in 2009. We design, build and sell cars, trucks, crossovers and automobile parts worldwide. We also provide automotive financing services through GM Financial. We analyze the results of our business through the following segments: GMNA, GME, GMIO, GMSA and GM Financial. Nonsegment operations and Maven, our ride- and car-sharing business, are classified as Corporate. Corporate includes certain centrally recorded income and costs such as interest, income taxes, corporate expenditures including autonomous vehicle-related engineering costs and certain nonsegment specific revenues and expenses. Principles of Consolidation The consolidated financial statements are prepared in conformity with U.S. GAAP. All intercompany balances and transactions have been eliminated in consolidation. Except for per share amounts or as otherwise specified, amounts presented within tables are stated in millions. We consolidate entities that we control due to ownership of a majority voting interest and we consolidate variable interest entities (VIEs) when we have variable interests and are the primary beneficiary. We continually evaluate our involvement with VIEs to determine when these criteria are met. Our share of earnings or losses of nonconsolidated affiliates is included in our consolidated operating results using the equity method of accounting when we are able to exercise significant influence over the operating and financial decisions of the affiliate. We use the cost method of accounting if we are not able to exercise significant influence over the operating and financial decisions of the affiliate. Use of Estimates in the Preparation of the Financial Statements Accounting estimates are an integral part of the consolidated financial statements. These estimates require the use of judgments and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses in the periods presented. We believe that the accounting estimates employed are appropriate and the resulting balances are reasonable; however, due to the inherent uncertainties in making estimates actual results could differ from the original estimates, requiring adjustments to these balances in future periods. GM Financial The amounts presented for GM Financial have been adjusted to include the effect of our tax attributes on GM Financial's deferred tax positions and provision for income taxes, which are not applicable to GM Financial on a stand-alone basis, and to eliminate the effect of transactions between GM Financial and the other members of the consolidated group. Accordingly, the amounts presented will differ from those presented by GM Financial on a stand-alone basis. Note 2. Significant Accounting Policies The accounting policies which follow are utilized by our automotive and automotive financing operations, unless otherwise indicated. Revenue Recognition Automotive Automotive net sales and revenue primarily consist of revenue generated from the sale of vehicles. Vehicle sales are recorded when title and risks and rewards of ownership have passed to our customers. For the majority of our automotive sales this occurs when a vehicle is released to the carrier responsible for transporting it to a dealer and when collectability is reasonably assured. Vehicle sales are recorded when the vehicle is delivered to the dealer in most remaining cases. Provisions for recurring or announced dealer and customer sales and leasing incentives, consisting of allowances and rebates, are recorded as reductions to Automotive net sales and revenue at the time of vehicle sale. All other incentives, allowances and rebates related to vehicles previously sold are recorded as reductions to Automotive net sales and revenue when announced. Taxes assessed by various government entities, such as sales, use and value-added taxes, collected at the time of sale are excluded from Automotive net sales and revenue. Vehicle sales to daily rental car companies with guaranteed repurchase obligations are accounted for as operating leases. Estimated lease revenue is recorded ratably over the estimated term of the lease based on the difference between net sales proceeds and the guaranteed repurchase amount. The difference between the cost of the vehicle and estimated residual value is depreciated on a straight-line basis over the estimated term of the lease. Automotive Financing - GM Financial Finance charge income earned on receivables is recognized using the effective interest method. Fees and commissions (including incentive payments) received and direct costs of originating loans are deferred and amortized over the term of the related finance receivables using the effective interest method and are removed from the consolidated 6 Table of Contents GENERAL MOTORS COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) balance sheets when the related finance receivables are sold, charged off or paid in full. Accrual of finance charge income on retail finance receivables is generally suspended on accounts that are more than 60 days delinquent, accounts in bankruptcy and accounts in repossession. Payments received on nonaccrual loans are first applied to any fees due, then to any interest due and then any remaining amounts are recorded to principal. Interest accrual generally resumes once an account has received payments bringing the delinquency to less than 60 days past due. Accrual of finance charge income on commercial finance receivables is generally suspended on accounts that are more than 90 days delinquent, upon receipt of a bankruptcy notice from a borrower, or where reasonable doubt exists about the full collectability of contractually agreed upon principal and interest. Payments received on nonaccrual loans are first applied to principal. Interest accrual resumes once an account has received payments bringing the account fully current and collection of contractual principal and interest is reasonably assured (including amounts previously charged off). Income from operating lease assets, which includes lease origination fees, net of lease origination costs and incentives, is recorded as operating lease revenue on a straight-line basis over the term of the lease agreement. Advertising and Promotion Expenditures Advertising and promotion expenditures, which are expensed as incurred in Automotive selling, general and administrative expense, were $5.3 billion, $5.1 billion and $5.2 billion in the years ended December 31, 2016, 2015 and 2014. Research and Development Expenditures Research and development expenditures, which are expensed as incurred in Automotive cost of sales, were $8.1 billion, $7.5 billion and $7.4 billion in the years ended December 31, 2016, 2015 and 2014. Cash Equivalents and Restricted Cash Cash equivalents are defined as short-term, highly-liquid investments with original maturities of 90 days or less. Cash and cash equivalents subject to contractual restrictions and not readily available are classified as restricted cash. We are required to post cash as collateral as part of certain agreements that we enter into as part of our operations. Restricted cash is invested in accordance with the terms of the underlying agreements and include amounts related to various deposits, escrows and other cash collateral. Restricted cash is included in Other current assets and Other assets in the consolidated balance sheets. Fair Value Measurements A three-level valuation hierarchy, based upon observable and unobservable inputs, is used for fair value measurements. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions based on the best evidence available. These two types of inputs create the following fair value hierarchy: Level 1 - Quoted prices for identical instruments in active markets; Level 2 - Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations whose significant inputs are observable; and Level 3 - Instruments whose significant inputs are unobservable. Financial instruments are transferred in and/or out of Level 1, 2 or 3 at the beginning of the accounting period in which there is a change in the valuation inputs. Marketable Securities We classify marketable securities as available-for-sale or trading. Various factors, including turnover of holdings and investment guidelines, are considered in determining the classification of securities. Available-for-sale securities are recorded at fair value with unrealized gains and losses recorded net of related income taxes in Accumulated other comprehensive loss until realized. Trading securities are recorded at fair value with changes in fair value recorded in Interest income and other non-operating income, net. We determine realized gains and losses for all securities using the specific identification method. We measure the fair value of our marketable securities using a market approach where identical or comparable prices are available and an income approach in other cases. If quoted market prices are not available, fair values of securities are determined using prices from a pricing service, pricing models, quoted prices of securities with similar characteristics or discounted cash flow models. These prices represent non-binding quotes. Our pricing service utilizes industry-standard pricing models that consider various inputs. We conduct an annual review of our pricing service and believe the prices received from our pricing service are a reliable representation of exit prices. An evaluation is made quarterly to determine if unrealized losses related to non-trading investments in securities are other-thantemporary. Factors considered include the length of time and extent to which the fair value has been below cost, the financial condition and near-term prospects of the issuer and the intent to sell or likelihood to be forced to sell the security before any anticipated recovery. GM Financial Receivables Finance receivables are carried at amortized cost, net of allowance for loan losses. The component of the allowance for retail finance receivables that is collectively evaluated for impairment is based on a statistical calculation 7 Table of Contents GENERAL MOTORS COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) which is supplemented by management judgment. GM Financial uses a combination of forecasting models to determine the allowance for loan losses. Factors that are considered when estimating the allowance include historical delinquency migration to loss, probability of default and loss given default. The loss confirmation period is a key assumption within the models and represents the average amount of time from when a loss event first occurs to when the receivable is charged off. GM Financial also considers an evaluation of overall portfolio credit quality based on various indicators. Retail finance receivables that become classified as troubled debt restructurings (TDRs) are separately assessed for impairment. A specific allowance is estimated based on the present value of the expected future cash flows of the receivable discounted at the loan's original effective interest rate. Finance charge income from loans classified as TDRs is accounted for in the same manner as other accruing loans. Cash collections on these loans are allocated according to the same payment hierarchy methodology applied to loans that are not classified as TDRs. Retail finance receivables are generally charged off in the month in which the account becomes 120 days contractually delinquent if GM Financial has not yet recorded a repossession charge-off. A charge-off generally represents the difference between the estimated net sales proceeds and the amount of the contract, including accrued interest. Inventories Inventories are stated at the lower of cost or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business less cost to sell, and considers general market and economic conditions, periodic reviews of current profitability of vehicles, product warranty costs and the effect of current and expected incentive offers at the balance sheet date. Net realizable value for off-lease and other vehicles is current auction sales proceeds less disposal and warranty costs. Productive material, work in process, supplies and service parts are reviewed to determine if inventory quantities are in excess of forecasted usage or if they have become obsolete. Equipment on Operating Leases Equipment on operating leases, net is reported at cost, less accumulated depreciation and impairment, net of origination fees or costs and lease incentives. Estimated income from operating lease assets, which includes lease origination fees, net of lease origination costs, is recorded as operating lease revenue on a straight-line basis over the term of the lease agreement. Leased vehicles are depreciated on a straight-line basis to an estimated residual value over the term of the lease agreements. We have significant investments in vehicle operating lease portfolios, which consist of vehicle leases to retail customers with lease terms of two to five years and vehicles leased to rental car companies with lease terms that average eight months. We are exposed to changes in the residual values of these assets. For impairment purposes the residual values represent estimates of the values of the vehicles leased at the end of the lease contracts and are determined based on 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 adequacy of the estimate of the residual value is evaluated over the life of the lease and adjustments may be made to the extent the expected value of the vehicle at lease termination changes. Adjustments may be in the form of revisions to the depreciation rate or recognition of an impairment charge. Impairment is determined to exist if an impairment indicator exists and the expected future cash flows, which include estimated residual values, are lower than the carrying amount of the vehicles leased. If the carrying amount is considered impaired an impairment charge is recorded for the amount by which the carrying amount exceeds fair value. Fair value is determined primarily using the anticipated cash flows, including estimated residual values. In our automotive operations when a leased vehicle is returned the asset is reclassified from Equipment on operating leases, net to Inventories at the lower of cost or estimated selling price, less cost to sell. Upon disposition, proceeds are recorded in Automotive net sales and revenue and costs are recorded in Automotive cost of sales. In our automotive finance operations when a leased vehicle is returned or repossessed the asset is recorded in Other assets at the lower of cost or estimated selling price, less costs to sell. 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. Depreciation expense and impairment charges related to Equipment on operating leases, net are recorded in Automotive cost of sales or GM Financial interest, operating and other expenses. Valuation of Cost and Equity Method Investments When events and circumstances warrant, investments accounted for under the cost or equity method of accounting are evaluated for impairment. An impairment charge is recorded whenever a decline in value of an investment below its carrying amount is determined to be other-than-temporary. Impairment charges related to equity 8 Table of Contents GENERAL MOTORS COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) method investments are recorded in Equity income. Impairment charges related to cost method investments are recorded in Interest income and other non-operating income, net. Property, net Property, plant and equipment, including internal use software, is recorded at cost. Major improvements that extend the useful life or add functionality 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. We 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 property, plant and equipment, the cost and related accumulated depreciation are eliminated and any resulting gain or loss is recorded in earnings. Impairment charges related to property are recorded in Automotive cost of sales, Automotive selling, general and administrative expense or GM Financial interest, operating and other expenses. Special Tools Special tools represent product-specific powertrain and non-powertrain related tools, dies, molds and other items used in the vehicle manufacturing process. Expenditures for special tools are recorded at cost and are capitalized. We amortize special tools over their estimated useful lives using the straight-line method or an accelerated amortization method based on their historical and estimated production volume. Impairment charges related to special tools are recorded in Automotive cost of sales. Goodwill Goodwill is tested for impairment annually on October 1 or when events occur or circumstances change that would trigger such a review. A two-step impairment test is used to identify potential goodwill impairment. Impairment exists when the carrying amount of goodwill exceeds its implied fair value. When performing our goodwill impairment testing, the fair values of our reporting units are determined based on valuation techniques using the best available information, primarily discounted cash flow projections. Because the fair value of goodwill can be measured only as a residual amount and cannot be determined directly we calculate the implied goodwill for those reporting units failing Step 1 in the same manner that goodwill is recognized in a business combination pursuant to Accounting Standards Codification (ASC) 805. Intangible Assets, net Intangible assets, excluding goodwill, primarily include brand names, technology and intellectual property, customer relationships and dealer networks. Intangible assets are amortized on a straight-line or an accelerated method of amortization over their estimated useful lives. An accelerated amortization method reflecting the pattern in which the asset will be consumed is utilized if that pattern can be reliably determined. We consider the period of expected cash flows and underlying data used to measure the fair value of the intangible assets when selecting a useful life. Impairment charges related to intangible assets are recorded in Automotive selling, general and administrative expense or Automotive cost of sales. Amortization of developed technology and intellectual property is recorded in Automotive cost of sales. Amortization of brand names, customer relationships and our dealer networks is recorded in Automotive selling, general and administrative expense or GM Financial interest, operating and other expenses. Valuation of Long-Lived Assets The carrying amount of long-lived assets and finite-lived intangible assets to be held and used in the business are evaluated for impairment when events and circumstances warrant. If the carrying amount of a long-lived asset group is considered impaired, a loss is recorded based on the amount by which the carrying amount exceeds fair value. Productspecific long-lived asset groups and non-product specific long-lived assets are separately tested for impairment on an asset group basis. Fair value is determined using either the market or sales comparison approach, cost approach or anticipated cash flows discounted at a rate commensurate with the risk involved. Long-lived assets to be disposed of other than by sale are considered held for use until disposition. Pension and OPEB Plans Attribution, Methods and Assumptions The cost of benefits provided by defined benefit pension plans is recorded in the period employees provide service. The cost of pension plan amendments that provide for benefits already earned by plan participants is amortized over the expected period of benefit which may be the duration of the applicable collective bargaining agreement specific to the plan, the expected future working lifetime or the life expectancy of the plan participants. The cost of medical, dental, legal service and life insurance benefits provided through postretirement benefit plans is recorded in the period employees provide service. The cost of postretirement plan amendments that provide for benefits already earned by plan participants is amortized over the expected period of benefit which may be the average period to full eligibility or the average life expectancy of the plan participants. 9 Table of Contents GENERAL MOTORS COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) An expected return on plan asset methodology is utilized to calculate future pension expense for certain significant funded benefit plans. A market-related value of plan assets methodology is also utilized that averages gains and losses on the plan assets over a period of years to determine future pension expense. The methodology recognizes 60% of the difference between the fair value of assets and the expected calculated value in the first year and 10% of that difference over each of the next four years. The discount rate assumption is established for each of the retirement-related benefit plans at their respective measurement dates. In the U.S. we use a cash flow matching approach that uses projected cash flows matched to spot rates along a high quality corporate bond yield curve to determine the present value of cash flows to calculate a single equivalent discount rate. Effective 2016 we applied the individual annual yield curve rates instead of the single equivalent discount rate to determine the service cost and interest cost for our pension and OPEB plans. This refinement more specifically links the cash flows related to service cost and interest cost to bonds maturing in their year of payment. The benefit obligation for pension plans in Canada, the U.K. and Germany represents 91% of the non-U.S. pension benefit obligation at December 31, 2016. The discount rates for plans in Canada, the U.K. and Germany are determined using a cash flow matching approach similar to the U.S. approach. Plan Asset Valuation Due to the lack of timely available market information for certain investments in the asset classes described below as well as the inherent uncertainty of valuation, reported fair values may differ from fair values that would have been used had timely available market information been available. Common and Preferred Stock Common and preferred stock for which market prices are readily available at the measurement date are valued at the last reported sale price or official closing price on the primary market or exchange on which they are actively traded and are classified in Level 1. Such equity securities for which the market is not considered to be active are valued via the use of observable inputs, which may include, among others, the use of adjusted market prices last available, bids or last available sales prices and/or other observable inputs and are classified in Level 2. Common and preferred stock classified in Level 3 are privately issued securities or other issues that are valued via the use of valuation models using significant unobservable inputs that generally consider, among others, aged (stale) pricing, earnings multiples, discounted cash flows and/or other qualitative and quantitative factors. Debt Securities Valuations for debt securities are based on quotations received from independent pricing services or from dealers who make markets in such securities. Debt securities priced via pricing services that utilize matrix pricing which considers readily observable inputs such as the yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices, are classified in Level 2. Debt securities that are typically priced by dealers and pricing services via the use of proprietary pricing models which incorporate significant unobservable inputs are classified in Level 3. These inputs primarily consist of yield and credit spread assumptions, discount rates, prepayment curves, default assumptions and recovery rates. Investment Funds, Private Equity and Debt Investments and Real Estate Investments Investment funds, private equity and debt investments and real estate investments are valued based on the Net Asset Value (NAV) per Share (or its equivalent) as a practical expedient to estimate fair value due to the absence of readily available market prices. NAV's are provided by the respective investment sponsors or investment advisers and are subsequently reviewed and approved by management. In the event management concludes a reported NAV does not reflect fair value or is not determined as of the financial reporting measurement date, we will consider whether and when deemed necessary to make an adjustment at the balance sheet date. In determining whether an adjustment to the external valuation is required, we will review material factors that could affect the valuation, such as changes in the composition or performance of the underlying investments or comparable investments, overall market conditions, expected sale prices for private investments which are probable of being sold in the short-term and other economic factors that may possibly have a favorable or unfavorable effect on the reported external valuation. Stock Incentive Plans Our stock incentive plans include RSUs, RSAs, Performance Share Units (PSUs) and stock options. We measure and record compensation expense based on the fair value of our common stock on the date of grant for RSUs, RSAs and PSUs and the grant date fair value of stock options determined utilizing a lattice model or the Black-Scholes-Merton formula. Compensation cost for awards that do not have an established accounting grant date is based on the fair value of our common stock at the end of each reporting period. We record compensation cost for RSUs, RSAs and PSUs on a straight-line basis over the entire vesting period, or for retirement eligible employees over the requisite service period. We use the graded vesting method to record compensation cost for stock options over the lesser of the vesting period or the time period an employee becomes eligible 10 Table of Contents GENERAL MOTORS COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) to retain the award at retirement. The liability for stock incentive plan awards settled in cash is remeasured to fair value at the end of each reporting period. Product Warranty and Recall Campaigns The estimated costs related to product warranties are accrued at the time products are sold and are charged to Automotive cost of sales. These estimates are established using historical information on the nature, frequency and average cost of claims of each vehicle line or each model year of the vehicle line and assumptions about future activity and events. Revisions are made when necessary and are based on changes in these factors. The estimated costs related to recall campaigns are generally accrued at the time of vehicle sale in GMNA by applying a frequency times severity approach that considers the number of historical recall campaigns, the number of vehicles per recall campaign, the estimated number of vehicles to be repaired and the cost per vehicle for each recall campaign. The estimated costs associated with recall campaigns in other geographical regions are accrued when probable and estimable using the estimated costs of repairs and the estimated number of vehicles to be repaired. Costs associated with recall campaigns are charged to Automotive cost of sales. Revisions are made when necessary based on changes in these factors. Income Taxes The liability method is used in accounting for income taxes. Deferred tax assets and liabilities are recorded for temporary differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements using the statutory tax rates in effect for the year in which the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recorded in the results of operations in the period that includes the enactment date under the law. Deferred income tax assets are evaluated quarterly to determine if valuation allowances are required or should be adjusted. We establish valuation allowances for deferred tax assets based on a more likely than not standard. The ability to realize deferred tax assets depends on the ability to generate sufficient taxable income within the carryback or carryforward periods provided for in the tax law for each applicable tax jurisdiction. The assessment regarding whether a valuation allowance is required or should be adjusted also considers all available positive and negative evidence factors. It is difficult to conclude a valuation allowance is not required when there is significant objective and verifiable negative evidence, such as cumulative losses in recent years. We utilize a rolling three years of actual and current year results as the primary measure of cumulative losses in recent years. Income tax expense (benefit) for the year is allocated between continuing operations and other categories of income such as Other comprehensive income (loss). In periods in which there is a pre-tax loss from continuing operations and pre-tax income in another income category, the tax benefit allocated to continuing operations is determined by taking into account the pre-tax income of other categories. We record uncertain tax positions on the basis of a two-step process whereby we determine whether it is more likely than not that the tax positions will be sustained based on the technical merits of the position, and for those tax positions that meet the more likely than not recognition, we recognize the largest amount of tax benefit that is greater than 50% likely to be realized upon ultimate settlement with the related tax authority. We record interest and penalties on uncertain tax positions in Income tax expense (benefit). Foreign Currency Transactions and Translation The assets and liabilities of foreign subsidiaries that use the local currency as their functional currency are translated to U.S. Dollars based on the current exchange rate prevailing at each balance sheet date and any resulting translation adjustments are included in Accumulated other comprehensive loss. The assets and liabilities of foreign subsidiaries whose local currency is not their functional currency are remeasured from their local currency to their functional currency and then translated to U.S. Dollars. Revenues and expenses are translated into U.S. Dollars using the average exchange rates prevailing for each period presented. Gains and losses arising from foreign currency transactions and the effects of remeasurements discussed in the preceding paragraph are recorded in Automotive cost of sales and GM Financial interest, operating and other expenses unless related to Automotive debt, which are recorded in Interest income and other non-operating income, net. Foreign currency transaction and remeasurement losses were $358 million, $829 million and $437 million in the years ended December 31, 2016, 2015 and 2014. Derivative Financial Instruments Derivative financial instruments are recognized as either assets or liabilities at fair value. The accounting for changes in the fair value of each derivative financial instrument depends on whether it has been designated and qualifies as an accounting hedge, as well as the type of hedging relationship identified. Derivative instruments are not used for trading or speculative purposes. 11 Table of Contents GENERAL MOTORS COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Automotive We utilize options, swaps and forward contracts to manage foreign currency and commodity price risks. The change in fair value of option and forward contracts not designated as hedges is recorded in Interest income and other non-operating income, net. Cash flows for all derivative financial instruments are classified in cash flows from operating activities. At December 31, 2016 and 2015 we had derivative instruments not designated as hedges in asset positions with notional amounts of $5.7 billion and $6.8 billion and in liability positions with notional amounts of $651 million and $264 million. The fair value of these derivative instruments was insignificant at December 31, 2016 and 2015. Certain foreign currency and commodity forward contracts have been designated as cash flow hedges. The risk being hedged is the foreign currency and commodity price risk related to forecasted transactions. If the contract has been designated as a cash flow hedge, the effective portion of changes in the fair value of the cash flow hedge is deferred in Accumulated other comprehensive loss and is recognized in Automotive cost of sales when the hedged item affects earnings. Any ineffective portion is recorded in Automotive cost of sales in the period of remeasurement. At December 31, 2016 the notional amount of these derivative instruments in asset positions was $909 million and was insignificant at December 31, 2015. The fair value of these derivative instruments was insignificant at December 31, 2016 and 2015. Automotive Financing - GM Financial GM Financial utilizes interest rate option and swap agreements to manage interest rate risk and foreign currency swap agreements to manage foreign currency risk. The change in fair value of the option and swap agreements not designated as hedges is recorded in GM Financial interest, operating and other expenses. Cash flows for all derivative financial instruments are classified in cash flows from operating activities. At December 31, 2016 and 2015 GM Financial had derivative instruments not designated as hedges in asset positions with notional amounts of $20.7 billion and $11.9 billion and liability positions with notional amounts of $20.6 billion and $13.9 billion. The fair value of these derivatives was insignificant at December 31, 2016 and 2015. Certain interest rate swap agreements have been designated as fair value hedges of fixed-rate debt. At December 31, 2016 and 2015 the notional amounts of these instruments in liability positions were $7.7 billion and $1.0 billion. The fair value of these derivative instruments in liability positions was $276 million at December 31, 2016 and was insignificant at December 31, 2015. The risk being hedged is the risk of changes in the fair value of the hedged debt attributable to changes in the benchmark interest rate. If the swap has been designated as a fair value hedge, the changes in the fair value of the hedged debt are recorded in Interest expense. The change in fair value of the related derivative (excluding accrued interest) is also recorded in Interest expense. Beginning in 2016 certain interest rate swap and foreign currency swap agreements have been designated as cash flow hedges. At December 31, 2016 the notional amount of these designated instruments in asset positions was $3.5 billion and in liability positions was $2.1 billion. The fair value of these derivative instruments was insignificant at December 31, 2016. The risk being hedged is the foreign currency and interest rate risk related to forecasted transactions. If the contract has been designated as a cash flow hedge, the effective portion of changes in the fair value of the cash flow hedge is deferred in Accumulated other comprehensive loss and is recognized in GM Financial interest, operating and other expenses when the hedged item affects earnings. Any ineffective portion is recorded in GM Financial interest, operating and other expenses in the period of remeasurement. The gains or losses on all derivative instruments included in the consolidated income statements and Accumulated other comprehensive loss were insignificant in the years ended December 31, 2016, 2015 and 2014. Recently Adopted Accounting Standards Effective January 1, 2016 we retrospectively adopted Accounting Standards Update (ASU) 2015-17, "Balance Sheet Classification of Deferred Taxes", which requires all deferred tax assets and liabilities to be classified as non-current. As a result current Deferred income taxes and Accrued liabilities decreased by $8.6 billion and $249 million and non-current Deferred income taxes increased by $8.4 billion at December 31, 2015 in our consolidated balance sheets. In November 2016 the Financial Accounting Standards Board (FASB) issued ASU 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash" (ASU 2016-18), which clarifies the presentation of restricted cash and restricted cash equivalents in the statements of cash flows. Under ASU 2016-18 restricted cash and restricted cash equivalents are included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statements of cash flows. We adopted ASU 2016-18 during the three months ended December 31, 2016 on a retrospective basis. As a result Net cash provided by operating activities decreased by $287 million in the year ended December 31, 2015 and increased by an insignificant amount in the year ended December 31, 2014. Net cash used in investing activities decreased by $325 million and $339 million in the years ended December 31, 2015 and 2014 and beginning-of-period cash, cash equivalents and restricted cash increased by $2.1 billion, $2.2 billion and $2.0 billion in 2016, 2015 and 2014. 12 Table of Contents GENERAL MOTORS COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Accounting Standards Not Yet Adopted In May 2014 the FASB issued ASU 2014-09, \"Revenue from Contracts with Customers\" (ASU 2014-09), which requires us to recognize revenue when a customer obtains control rather than when we have transferred substantially all risks and rewards of a good or service and requires expanded disclosures. ASU 2014-09, as amended, is effective for us beginning January 1, 2018. ASU 2014-09 will affect the amount and timing of certain revenue related transactions primarily resulting from the earlier recognition of certain sales incentives and fixed fee license arrangements. Upon adoption of ASU 2014-09 sales incentives will be recorded at the time of sale rather than at the later of sale or announcement and fixed fee license arrangements will be recognized when the customer is granted access to intellectual property instead of over the contract period. Certain transactions with daily rental car companies may also qualify to be accounted for as a sale as opposed to the current accounting as an operating lease. We have not yet determined whether we will adopt the provisions of ASU 2014-09 on a retrospective basis or through a cumulative adjustment to equity. We do not expect the adoption of ASU 2014-09 to be material to our consolidated financial statements. We continue to assess the overall impact the adoption of ASU 2014-09 will have on our consolidated financial statements, and anticipate testing our new controls and processes designed to comply with ASU 2014-09 throughout 2017 to permit adoption by January 1, 2018. In January 2016 the FASB issued ASU 2016-01, \"Recognition and Measurement of Financial Assets and Financial Liabilities\" (ASU 2016-01), which requires, among other items, equity investments that are not accounted for under the equity method of accounting to be measured at fair value with changes recognized in net income and updates certain presentation and disclosure requirements. ASU 2016-01 is effective for us beginning January 1, 2018. At December 31, 2016 the carrying value of equity investments that are not accounted for under the equity method of accounting totaled $526 million and unrealized gains or losses were insignificant. Currently we do not believe the adoption of ASU 2016-01 will have a material impact on our consolidated financial statements, however changes in future market conditions and equity investment balances prior to the implementation date will affect the impact the adoption may have on our consolidated financial statements. In February 2016 the FASB issued ASU 2016-02, "Leases" (ASU 2016-02), which requires us as the lessee to recognize most leases on the balance sheet thereby resulting in the recognition of lease assets and liabilities for those leases currently classified as operating leases. The accounting for leases where we are the lessor remains largely unchanged. ASU 2016-02 is effective for us beginning January 1, 2019 with early adoption permitted. While we are currently assessing the impact ASU 2016-02 will have on our consolidated financial statements, we expect the primary impact to our consolidated financial position upon adoption will be the recognition, on a discounted basis, of our minimum commitments under noncancelable operating leases on our consolidated balance sheets resulting in the recording of right of use assets and lease obligations. Our current minimum commitments under noncancelable operating leases are disclosed in Note 15. In June 2016 the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" (ASU 2016-13), that requires entities to use a new impairment model based on expected losses. Under this new model an entity would recognize an impairment allowance equal to its current estimate of credit losses on financial assets measured at amortized cost. ASU 2016-13 is effective for us beginning January 1, 2020 with early adoption permitted January 1, 2019. Credit losses under the new model will consider relevant information about past events, current conditions and reasonable and supportable forecasts, resulting in recognition of lifetime expected credit losses by GM Financial upon loan origination as compared to our current accounting that recognizes credit losses as incurred. We are currently evaluating new processes to calculate credit losses in accordance with ASU 2016-13 that, once completed, will determine the impact on our consolidated financial statements which at the date of adoption will increase the allowance for credit losses with a resulting negative adjustment to retained earnings. Note 3. Marketable Securities The following table summarizes the fair value of cash equivalents and marketable securities which approximates cost: 13 Table of Contents GENERAL MOTORS COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Fair Value Level Cash and cash equivalents Cash, cash equivalents and time deposits Available-for-sale securities U.S. government and agencies Corporate debt Money market funds Sovereign debt Total available-for-sale securities - cash equivalents Total cash and cash equivalents Marketable securities December 31, 2016 December 31, 2015 $ $ 2 2 1 2 Available-for-sale securities U.S. government and agencies 2 Corporate debt Mortgage and asset-backed Sovereign debt Total available-for-sale securities - marketable securities Trading securities - sovereign debt Total marketable securities Restricted cash Cash, cash equivalents and time deposits Available-for-sale securities, primarily money market funds Total restricted cash 1,158 2,524 1,802 1,399 6,883 7,730 4,071 2,275 1,162 7,508 $ 12,960 $ 15,238 $ 5,886 $ 5,329 $ 3,611 197 2,147 11,841 11,841 $ 2,196 57 7,582 581 8,163 2 2 2 2 $ 1 $ Available-for-sale securities included above with contractual maturities (excluding mortgage and asset-backed securities) Due in one year or less Due between one and five years Total available-for-sale securities with contractual maturities 6,077 $ $ 531 1,687 2,218 $ $ 833 1,340 2,173 10,957 5,786 16,743 Sales proceeds from investments classified as available-for-sale and sold prior to maturity were $8.5 billion, $7.9 billion and $5.9 billion in the years ended December 31, 2016, 2015 and 2014. Net unrealized gains and losses on trading securities were insignificant in the years ended December 31, 2016, 2015 and 2014. The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same amounts shown in the consolidated statements of cash flows: Cash and cash equivalents Restricted cash included in Other current assets Restricted cash included in Other assets Total cash, cash equivalents and restricted cash as shown in the consolidated statements of cash flows 14 December 31, 2016 December 31, 2015 $ 12,960 1,613 587 $ 15,238 1,529 565 $ 15,160 $ 17,332 Table of Contents GENERAL MOTORS COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 4. GM Financial Receivables December 31, 2016 Retail Finance receivables, collectively evaluated for impairment, net of fees Finance receivables, individually evaluated for impairment, net of fees GM Financial receivables Less: allowance for loan losses GM Financial receivables, net Commercial $ 30,989 $ 1,921 32,910 (793) $ 32,117 $ Fair value of GM Financial receivables 10,652 70 10,722 (50) 10,672 December 31, 2015 Total Retail $ 41,641 $ 27,512 1,991 43,632 (843) $ 42,789 Commercial $ 8,127 1,612 29,124 (735) $ 28,389 82 8,209 (47) $ 8,162 $ 42,739 Total $ 35,639 1,694 37,333 (782) $ 36,551 $ 36,707 GM Financial estimates the fair value of retail finance receivables using observable and unobservable Level 3 inputs within a cash flow model. The inputs reflect assumptions regarding expected prepayments, deferrals, delinquencies, recoveries and chargeoffs of the loans within the portfolio. The cash flow model produces an estimated amortization schedule of the finance receivables. The projected cash flows are then discounted using current risk-adjusted rates to derive the fair value of the portfolio. Macroeconomic factors could affect the credit performance of the portfolio and therefore could potentially affect the assumptions used in GM Financial's cash flow model. A substantial majority of GM Financial's commercial finance receivables have variable interest rates and maturities of one year or less. Therefore, the carrying amount, a level 2 input, is considered to be a reasonable estimate of fair value. Years Ended December 31, 2016 Allowance for loan losses at beginning of period Provision for loan losses Charge-offs Recoveries Effect of foreign currency Allowance for loan losses at end of period $ $ 2015 782 $ 669 (1,173) 561 4 843 2014 695 $ 624 (999) 487 (25) $ 782 548 604 (914) 470 (13) $ 695 The allowance for loan losses on retail and commercial finance receivables included a collective allowance of $560 million, $553 million and $518 million and a specific allowan