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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) 

## Aggregate Contractual Obligations 

We are party to certain contractual obligations involving commitments to make payments to others. Most of these are debt obligations, which are recorded on our balance sheets and disclosed in our Notes to the Financial Statements. Long-term debt may have fixed or variable interest rates. For long-term debt with variable rate interest, we estimate the future interest payments based on projected market interest rates for various floating rate benchmarks received from third parties. In addition, we may enter into contracts with suppliers for purchases of certain services, including operating lease commitments. These arrangements may contain minimum levels of service requirements. Our aggregate contractual obligations at December 31, 2020 are shown below (in millions): 

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__________ (a) Excludes unamortized discounts, unamortized issuance costs, and fair value adjustments. 

Liabilities recorded for unrecognized tax benefits of $109 million are excluded from the table above. Due to the high degree of uncertainty regarding the timing of future cash flows associated with income tax liabilities, we are unable to make a reasonably reliable estimate of the amount and period of payment. For additional information on income taxes, see Note 10 of our Notes to the Financial Statements. 

For additional information on our long-term debt and operating lease obligations, see Notes 9 and 16, respectively, of our Notes to the Financial Statements. 

## Critical Accounting Estimates 

We consider an accounting estimate to be critical if (1) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made; and (2) changes in the estimate that are reasonably likely to occur from period to period, or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. 

The accounting estimates that are most important to our business involve: 

• Allowance for credit losses; and 

• Accumulated depreciation on vehicles subject to operating leases. 

Management has discussed the development and selection of these critical accounting estimates with Ford’s and our audit committees, and these audit committees have reviewed these estimates and disclosures. 

## Allowance for Credit Losses 

The allowance for credit losses represents our estimate of the expected lifetime credit losses inherent in finance receivables as of the balance sheet date. The adequacy of the allowance for credit losses is assessed quarterly and the assumptions and models used in establishing the allowance are evaluated regularly. Because credit losses can vary substantially over time, estimating credit losses requires a number of assumptions about matters that are uncertain. Changes in our assumptions affect Provision for credit losses  on our income statements and the allowance for credit losses contained within Total finance receivables, net  on our balance sheets. For additional information regarding our allowance for credit losses, see Note 4 of our Notes to the Financial Statements. 

