78GE2002ANNUALREPORTNOTESTOCONSOLIDATEDFINANCIALSTATEMENTSNOTE1SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIESConsolidationOurconsolidatedfinancialstatementsrepresenttheaddingtogetherofallaffiliates—companiesthatGeneralElectricCompanydirectlyorindirectlycontrols.Resultsofassociatedcompanies—generallycompaniesinwhichweown20%to50%andoverwhichwe,directlyorindirectly,havesig-nificantinfluence—areincludedinthefinancialstatementsona“one-line”basis.FinancialstatementpresentationWehavereclassifiedcertainprior-yearamountstoconformtothisyear’spresentation.Financialdataandrelatedmeasurementsarepresentedinthefollowingcategories:•GEThisrepresentstheaddingtogetherofallaffiliatesotherthanGeneralElectricCapitalServices,Inc.(GECS),whoseoperationsarepresentedonaone-linebasis.•GECSThisaffiliateownsallofthecommonstockofGeneralElectricCapitalCorporation(GECapital)andGEGlobalInsuranceHoldingCorporation(GEGlobalInsuranceHolding),theparentofEmployersReinsuranceCorporation.GECapital,GEGlobalInsuranceHoldingandtheirrespectiveaffiliatesareconsolidatedintheGECScolumnsandconstituteitsbusiness.•CONSOLIDATEDThisrepresentstheaddingtogetherofGEandGECS.Theeffectsoftransactionsamongrelatedcompanieswithinandbetweeneachoftheabove-mentionedgroupsareeliminated.TransactionsbetweenGEandGECSareimmaterialandconsistprimarilyofGECSservicesformaterialprocurementandtradepayablesandreceivablesmanagement,aircraftenginesandmedicalequipmentmanufacturedbyGEthatareleasedtoothers,buildingsandequipmentleasedbyGEfromGECS,andGEinvest-mentsofcashinGECScommercialpaper.Preparingfinancialstatementsinconformitywithgen-erallyacceptedaccountingprinciplesrequiresustomakeestimatesandassumptionsthataffectreportedamountsandrelateddisclosures.Actualresultscoulddifferfromthoseestimates.SalesofgoodsandservicesWerecordsalesofgoodswhenafirmsalesagreementisinplace,deliveryhasoccurredandcollectibilityofthefixedordeterminablesalespriceisreasonablyassured.Ifcustomeracceptanceofproductsisnotassured,salesarerecordedonlyuponformalcustomeracceptance.SalesofgoodsintheAppliances,IndustrialSystems,ITSolutions,Lighting,Plastics,SpecialtyMaterialsandGESupplybusinessestypicallydonotincludemultipleproductand/orserviceelements,ascomparedwithsalesincertainofthebusinessesreferredtobelow.Consumerlightingproductsandcomputerhardwareandsoftwareareoftensoldwitharightofreturn.Accumulatedexperi-enceisusedtoestimateandprovideforsuchreturns.SalesofgoodsintheAircraftEngines,MedicalSystems,PowerSystems,TransportationSystemsandcertainIndustrialSystemsbusinessessometimesincludemultiplecomponentsandsometimesincludeservicessuchasinstallation.Insuchcontracts,amountsassignedtoeachcomponentarebasedonthatcomponent’sobjectivelydeterminedfairvalue,suchasthesalespriceforthecomponentwhenitissoldseparatelyorcompetitorpricesforsimilarcomponents.Ingeneral,salesarerecognizedindividuallyfordeliveredcomponentsonlywhenundeliv-eredcomponentsarenotessentialtotheirfunctionality.However,whenundeliveredcomponentsareinconsequen-tialorperfunctory,suchascertaintrainingcommitments,salesarerecognizedonthetotalcontractwithprovisionmadeforthecostoftheincompleteelements.Werecordsalesofproductservicesandcertainpowergenerationequipmentinaccordancewithcontracts.Forlong-termproductservicesagreements,weuseestimatedcontractprofitratestorecordsalesasworkisperformed.Forcertainpowergenerationequipment,weusees...
