AIG 2011 Annual Report Download - page 242

American International Group, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Accounting Standards Adopted During 2010
Accounting for Transfers of Financial Assets
In June 2009, the FASB issued an accounting standard addressing transfers of financial assets that removes the
concept of a qualifying special-purpose entity (QSPE) from the FASB Accounting Standards Codification and
removes the exception that exempted transferors from applying the consolidation rules to QSPEs.
The standard was effective for interim and annual periods beginning on January 1, 2010 for AIG. Earlier
application was prohibited. The adoption of this standard increased both assets and liabilities by approximately
$1.3 billion as a result of consolidating two previously unconsolidated QSPEs. The adoption of this standard did
not have a material effect on AIG’s consolidated financial condition, results of operations or cash flows.
Consolidation of Variable Interest Entities
In June 2009, the FASB issued an accounting standard that amends the guidance addressing consolidation of
certain variable interest entities with an approach focused on identifying which enterprise has the power to direct
the activities of a variable interest entity that most significantly affect the entity’s economic performance and has
(1) the obligation to absorb losses of the entity or (2) the right to receive benefits from the entity. The standard
also requires enhanced financial reporting by enterprises involved with variable interest entities.
The following table summarizes the two methods applied by AIG and the amount and classification in the
Consolidated Balance Sheet of the assets and liabilities consolidated as a result of the adoption of the standard
on January 1, 2010:
Transition Methods
Fair Value Carrying
(in millions) Option Value Total
Assets:
Bond trading securities, at fair value $ 1,239 $ 1,262 $ 2,501
Mortgage and other loans receivable - 1,980 1,980
Other invested assets - 480 480
Other asset accounts 194 150 344
Assets held for sale 4,630 - 4,630
Total Assets $ 6,063 $ 3,872 $ 9,935
Liabilities:
FRBNY commercial paper funding facility $ 1,088 $ - $ 1,088
Other long-term debt - 1,533 1,533
Other liability accounts 13132
Liabilities held for sale 4,525 - 4,525
Total Liabilities $ 5,614 $ 1,564 $ 7,178
The cumulative effect adjustment of electing the fair value option was not material to AIG’s accumulated
deficit.
228 AIG 2011 Form 10-K