NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2011, 2010 and 2009 (currencies in millions) Truck and Other:  Substantially all sales and revenues of trucks and related aftermarket parts are recorded by the  Company when products are shipped to dealers or customers, except for certain truck shipments that are subject to  a residual value guarantee to the customer. Revenues related to these shipments are recognized on a straight-line  basis over the guarantee period (see Note E). At the time certain truck and parts sales to a dealer are recognized, the Company records an estimate of the future sales incentive costs related to such sales. The estimate is based on  historical data and announced incentive programs.  Revenue Recognition: Financial Services:  Interest income from finance and other receivables is recognized using the interest method.  Certain loan origination costs are deferred and amortized to interest income over the expected life of the contracts,  generally 36 to 60 months, using the straight-line method which approximates the interest method. For operating  leases, rental revenue is recognized on a straight-line basis over the lease term.  Recognition of interest income and rental revenue is suspended (put on non-accrual status) when the receivable  becomes more than 90 days past the contractual due date or earlier if some other event causes the Company to  determine that collection is not probable. Accordingly, there were no finance receivables more than 90 days past due  still accruing interest at December 31, 2011 or 2010. Recognition is resumed if the receivable becomes contractually  current by the payment of all amounts due under the terms of the existing contract and collection of remaining  amounts is considered probable (if not modified), or after the customer has made scheduled payments for three  months and collection of remaining amounts is considered probable (if contractually modified). Payments received  while the finance receivable is impaired or on non-accrual status are applied to interest and principal in accordance  with the contractual terms. Cash and Cash Equivalents:  Cash equivalents consist of liquid investments with a maturity at date of purchase of  90 days or less. Marketable Debt Securities:  The Company’s investments in marketable debt securities are classified as available- for-sale. These investments are stated at fair value with any unrealized gains or losses, net of tax, included as a  component of accumulated other comprehensive income.  The Company utilizes third-party pricing services for all of its marketable debt security valuations. The Company  reviews the pricing methodology used by the third-party pricing services including the manner employed to collect  market information. On a periodic basis, the Company also performs review and validation procedures on the  pricing information received from the third-party providers. These procedures help ensure that the fair value  information used by the Company is determined in accordance with applicable accounting guidance. The Company evaluates its investment in marketable securities at the end of each reporting period to determine if a  decline in fair value is other-than-temporary. Realized losses are recognized upon management’s determination that  a decline in fair value is other than temporary. The determination of other-than-temporary impairment is a  subjective process, requiring the use of judgments and assumptions regarding the amount and timing of recovery.  The Company reviews and evaluates its investments at least quarterly to identify investments that have indications  of other-than-temporary impairments. It is reasonably possible that a change in estimate could occur in the near  term relating to other-than-temporary impairment. Accordingly, the Company considers several factors when  evaluating debt securities for other-than-temporary impairment, including whether the decline in fair value of the  security is due to increased default risk for the specific issuer or market interest rate risk. In assessing default risk, the Company considers the collectability of principal and interest payments by monitoring  changes to issuers’ credit ratings, specific credit events associated with individual issuers as well as the credit ratings  of any financial guarantor, and the extent and duration to which amortized cost exceeds fair value.