Fair Value of Financial Instruments (Disclosures)

6 Months Ended

Sep. 30, 2011

Fair Value Disclosures [Abstract]

Fair Value Disclosures Text Block

Note 3 - Fair Value of Financial Instruments

The accounting guidance for financial instruments requires disclosures of the estimated fair value of certain financial instruments and the methods and significant assumptions used to estimate their fair value. Financial instruments that are within the scope of this accounting guidance are included in the table below.

The following is a description of financial instruments for which the ending balances as of September 30, 2011 and March 31, 2011 are not carried at fair value in their entirety on the Consolidated Balance Sheet.

Finance Receivables

Fair value of finance receivables is generally determined by valuing expected discounted cash flows using a securitization model. We estimate cash flows expected to be collected using contractual principal and interest cash flows adjusted for specific factors, such as prepayments, default rates, loss severity, credit scores, and collateral type. The securitization model utilizes quoted secondary market rates if available, or estimated market rates that incorporate management's best estimate of investor assumptions about the portfolio.

Commercial Paper

The carrying value of commercial paper issued is assumed to approximate fair value due to its short duration and generally negligible credit risk. We validate this assumption using quoted market prices where available.

Unsecured Notes and Loans Payable

We use quoted market prices for debt when available. When quoted market prices are not available, fair value is estimated based on current market rates and credit spreads for debt with similar maturities.

Note 3 - Fair Value of Financial Instruments (Continued)

Secured Notes and Loans Payable

Fair value is estimated based on current market rates and credit spreads for debt with similar maturities. We also use internal assumptions, including prepayment speeds and expected credit losses on the underlying securitized assets, to estimate the timing of cash flows to be paid on these instruments.

The carrying value and estimated fair value of certain financial instruments at September 30, 2011 and March 31, 2011 were as follows:

			September 30, 2011				March 31, 2011
			Carrying				Carrying
(Dollars in millions)			value		Fair value		value		Fair value
Financial assets
	Finance receivables, net	$	55,324	$	56,729	$	57,460	$	59,143
Financial liabilities
	Commercial paper	$	18,585	$	18,585	$	19,943	$	19,943
	Unsecured notes and loans payable	$	44,557	$	45,292	$	46,713	$	47,067
	Secured notes and loans payable	$	10,402	$	10,425	$	10,626	$	10,633

Finance receivables are presented net of the allowance for credit losses; the amount excludes related party transactions of $39 millionat both September 30, 2011 and March 31, 2011 and direct finance leases of $216 millionand $237 million at September 30, 2011 and March 31, 2011, respectively.

The carrying value of unsecured notes and loans payable represents the sum of unsecured notes and loans payable and carrying value adjustment. Also included in unsecured notes and loans payable is $4.3 billion and $4.2billion of loans payable to affiliates at September 30, 2011 and March 31, 2011, respectively,that are carried at amounts that approximate fair value.