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GMAC also recorded two offsetting credit amounts: (1) A
cash reduction in the amount it paid to the independent GM dealer
to purchase the rate supported fleet loan, and (2) unearned
income.19 The unearned income account was credited the face
amount of the note minus the fair market value of the note at the
time of its purchase.20
Unlike its treatment of retail rate support payments, GMAC
did not record the stated interest in the note as part of the
fleet purchase receivable or as unearned income.
When GMAC received the fleet rate support payment from GM,
GMAC increased its cash by the amount of the fleet rate support
payment and eliminated the rate support receivable. The unearned
income account remained unchanged.
GMAC did not include fleet rate support payments in income.
GMAC recognized the unearned income as earned income on a monthly
basis as the customer made payments over the term of the fleet
loan.
19 The unearned income account in the fleet transactions
was a contra asset account that reduced the amount of GMAC's
assets and ensured that the fleet purchaser receivable was
reported at its fair market value on GMAC's balance sheet.
20 Thus, the unearned income account included the discount
income GMAC earned on a rate supported fleet loan. The fleet
rate support payment was not included in the unearned income
account.
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