## Disclosures

### Learning Outcomes

• Identify common disclosures related to noncurrent liabilities

One last look at Ford’s balance sheet, just the liabilities section:

FORD MOTOR COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in millions)
Description December 31, 2018 December 31, 2019
Subcategory, LIABILITIES
Payables $21,520$     20,673
Other liabilities and deferred revenue (Note 17) 20,556 22,987
Automotive debt payable within one year (Note 20) 2,314 1,445
Ford Credit debt payable within one year (Note 20) 51,179 52,371
Other debt payable within one year (Note 20) 130
Liabilities held for sale (Note 24) 526
Total current liabilities Single line
95,569
Single line
98,132
Other liabilities and deferred revenue (Note 17) 23,588 25,324
Automotive long-term debt (Note 20) 11,233 13,233
Ford Credit long-term debt (Note 20) 88,887 87,658
Other long-term debt (Note 20) 600 470
Deferred income taxes (Note 7) 597 490
Total liabilities Single line
220,474
Single line
225,307

From the AICPA Financial Reporting Framework for Small- and Medium-Sized Entities Presentation and Disclosure Checklist:

Long-Term Debt [chapter 6]

Disclosure

1. For bonds, debentures, and similar securities, mortgages, and other long-term debt, has the entity disclosed
2. the title or description of the liability?
3. the interest rate?
4. the maturity date?
5. significant terms (for example, covenant details)?
6. the amount outstanding, separated between principal and accrued interest?
7. the currency in which the debt is payable if it is not repayable in the currency in which the entity measures items in its financial statements?
8. the repayment terms, including the existence of sinking fund, redemption, and conversion provisions? [6.15]
9. Has the entity disclosed the carrying amount of any financial liabilities that are secured? [6.16]
10. Has the entity disclosed
11. the carrying amount of assets it has pledged as collateral for liabilities?
12. the terms and conditions relating to its pledge? [6.16]
13. Has the entity disclosed the aggregate amount of payments estimated to be required in each of the next five years to meet repayment, sinking fund, or retirement provisions of financial liabilities? [6.17]
14. For financial liabilities recognized at the statement of financial position date, has the entity disclosed
15. whether any financial liabilities were in default or in breach of any term or covenant during the period that would permit a lender to demand accelerated repayment?
16. whether the default was remedied, or the terms of the liability were renegotiated, before the financial statements were available to be issued? [6.18]
17. [sic] The maximum potential amount of future payments (undiscounted) the guarantor could be required to make under the guarantee before any amounts that may possibly be recovered under recourse or collateralization provisions in the guarantee (see items d–e that follow)? (When the terms of the guarantee provide for no limitation to the maximum potential future payments under the guarantee, that fact should be disclosed. When the guarantor is unable to develop an estimate of the maximum potential amount of future payments under its guarantee, the guarantor should disclose that it cannot make such an estimate.)
18. The current carrying amount of the liability, if any, for the guarantor’s obligations under the guarantee, regardless of whether the guarantee is freestanding or embedded in another contract?
19. The nature of any recourse provisions that enable the guarantor to recover from third parties any of the amounts paid under the guarantee?
20. The nature of any assets held as collateral or by third parties that, upon the occurrence of any triggering event or condition under the guarantee, the guarantor can obtain and liquidate to recover all, or a portion of, the amounts paid under the guarantee? [17.39]
21. Has the entity disclosed the following items:
22. Interest capitalized?
23. Unused letters of credit?
24. Long-term debt agreements subject to subjective acceleration clauses, unless the likelihood of the acceleration of the due date is remote? [6.19]
25. For an entity that issues any of the following financial liabilities or equity instruments, has the entity disclosed information to enable users of the financial statements to understand the effects of features of the instrument, as follows:
26. For a financial liability that contains both a liability and an equity element, the

following information about the equity element including, when relevant:

1. The exercise date or dates of the conversion option?
2. The maturity or expiry date of the option?

iii. The conversion ratio or the strike price?

1. Conditions precedent to exercising the option?
2. Any other terms that could affect the exercise of the option, such as the existence of covenants that, if contravened, would alter the timing or price of the option?
3. For an instrument that is indexed to the entity’s equity or an identified factor, information that enables users of the financial statements to understand the nature, terms, and effects of the indexing feature, the conditions under which a payment will be made, and the expected timing of any payment? [6.20]

As you can see, debt and other liabilities continue to be an area of concern for financial analysts and therefore for the FASB and the accounting profession. Much of the fraud that went on with WorldCom and Enron centered around off-balance sheet financing and other undisclosed liabilities and falsified sources of cash and other funding.

What this means is that disclosures around debt that accompany the financial statements are complicated and detailed. Rather than try to duplicate all of those disclosures here, go to Ford’s online Annual Report and explore them carefully. See how much of the information you now recognize, and also notice what questions you may still have about those numbers and that qualitative information.