GENERAL ELECTRIC COMPANY AND CONSOLIDATED AFFILIATES STATEMENT OF AMOUNTS RECEIVED FOR STOCK IN EXCESS OF PAR VALUE (Amounts in millions) Year ended December 31,__ June 30, Year 1976 1971 1972 1973 1974 1975 (Unaudited) Balance at January 1................................... $330.0 $368.8 $ 396.6 $409.5 $414.5 $482.7 Premium received on shares issued............ 29.0 12.6 11.1 20.1 71.3 24.1 Net change from disposition of treasury stock 9.8 15.2 1.8 (15.1) 0.5 0.0 Conversion of Canadian General Electric preferred stock........................................ ..... Balance at end of period............................. $368.8 $396.6 $409.5 $414.5 $482.7 $506.8 See notes to financial statements. F-8 GENERAL ELECTRIC COMPANY AND CONSOLIDATED AFFILIATES NOTES TO FINANCIAL STATEMENTS (Information as of June 30, 1975 and 1976 and the six month periods then ended is unaudited.) 1. SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING PRINCIPLES AND POLICIES The following paragraphs summarize significant accounting and reporting principles and policies followed by General Electric. Basis of consolidation The Financial Statements consolidate the accounts of the parent General Electric Company and those of all majority-owned companies, except finance companies because their operations are not similar to those of the consolidated group. All significant items relating to transactions between the parent and affiliated companies are eliminated from the consolidated statements. The nonconsolidated finance companies are included in the Statement of Financial Position under Investments and are valued at equity plus advances. Companies in which General Electric and/or its consolidated affiliates own 20% to 50% of the voting stock ("associated companies") are also included under Investments and are valued at the appropriate share of equity plus advances. After-tax earnings of nonconsolidated finance companies and associated companies are included in the Statement of Current and Retained Earnings under Other income. Sales The Company and its consolidated affiliates record a transaction as a sale only when title to products passes to the customer or when services are performed in accordance with contract terms. Pensions Investments of the General Electric Pension Trust, which funds the obligations of the General Electric Pension Plan, are carried at amortized cost plus programmed appreciation in the common stock portfolio. Recognition of programmed appreciation is carried out on a systematic basis which does not give undue weight to short-term market fluctuations. This recognition of programmed appreciation is limited by a maximum ratio, calculated on a moving basis, of book to market values over a multiyear period. The funding program for the Pension Trust uses 6% as the estimated rate of future income. This rate includes systematic recognition of appreciation in the common stock portfolio. Unfunded liabilities of the Trust are being amortized over a 20-year period. Costs of a separate, supplementary pension plan primarily affecting long-service professional and managerial employees are not funded. Current service costs and amortization of past service costs over a period of 20 years are being charged to Company operating costs currently. Vacation expense Most employees earn credits during the current year for vacations to be taken in the following year. The expense for this liability is accrued during the year vacations are earned rather than being recorded in the year vacations are taken. Translating foreign currency into dollars Gains and losses produced by translating foreign currencies into U.S. dollars are included in current-year operating costs. For periods prior to January 1, 1976, assets and liabilities of foreign affiliates, except for plant and equipment and accumulated depreciation were translated into U.S. dollars at exchange rates in effect at the end of the period. Plant and equipment, depreciation expense and accumulated depreciation were translated at rates in effect when the assets were acquired. Income and expense items other than depreciation were translated at average rates prevailing during the year. Effective January 1, 1976 the Company adopted the foreign currency translation practices required by Financial Accounting Standards Board Statement No. 8. F-9