AIG 2013 Annual Report Download - page 240

In February 2013, the FASB issued an accounting standard that requires us to measure obligations resulting from
joint and several liability arrangements for which the total amount of the obligation is fixed at the reporting date as
the sum of (i) the amount we agreed to pay on the basis of our arrangement among our co-obligors and (ii) any
additional amount we expect to pay on behalf of our co-obligors.
The standard is effective for fiscal years and interim periods beginning after December 15, 2013, but earlier adoption
is permitted. Upon adoption, the standard should be applied retrospectively to all prior periods presented. We plan to
adopt the standard on its required effective date of January 1, 2014 and do not expect the adoption of the standard
to have a material effect on our consolidated financial condition, results of operations or cash flows.
In March 2013, the FASB issued an accounting standard addressing whether consolidation guidance or foreign
currency guidance applies to the release of the cumulative translation adjustment into net income when a parent sells
all or a part of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or net
assets that are a business (other than a sale of in-substance real estate) within a foreign entity. The guidance also
resolves the diversity in practice for the cumulative translation adjustment treatment in business combinations
achieved in stages involving foreign entities.
Under this standard, the entire amount of the cumulative translation adjustment associated with the foreign entity
should be released into earnings when there has been: (i) a sale of a subsidiary or group of net assets within a
foreign entity and the sale represents a complete or substantially complete liquidation of the foreign entity in which
the subsidiary or the net assets had resided; (ii) a loss of a controlling financial interest in an investment in a foreign
entity; or (iii) a change in accounting method from applying the equity method to an investment in a foreign entity to
consolidating the foreign entity.
The standard is effective for fiscal years and interim periods beginning after December 15, 2013, and will be applied
prospectively. We plan to adopt the standard on its required effective date of January 1, 2014 and do not expect the
adoption of the standard to have a material effect on our consolidated financial condition, results of operations or
cash flows.
In June 2013, the FASB issued an accounting standard that amends the criteria a company must meet to qualify as
an investment company, clarifies the measurement guidance, and requires new disclosures for investment
companies. An entity that is regulated by the Securities and Exchange Commission under the Investment Company
Act of 1940 (the 1940 Act) qualifies as an investment company. Entities that are not regulated under the 1940 Act
must have certain fundamental characteristics and must consider other characteristics to determine whether they
qualify as investment companies. An entity’s purpose and design must be considered when making the assessment.
The standard is effective for fiscal years and interim periods beginning after December 15, 2013. Earlier adoption is
prohibited. An entity that no longer meets the requirements to be an investment company as a result of this standard
should present the change in its status as a cumulative-effect adjustment to retained earnings as of the beginning of
the period of adoption. An entity that is an investment company should apply the guidance prospectively as an
adjustment to opening net assets as of the effective date. The adjustment to net assets represents both the
difference between the fair value and the carrying amount of the entity’s investments and any amount previously
recognized in Accumulated other comprehensive income. We plan to adopt the standard on its required effective
date of January 1, 2014 and do not expect the adoption of the standard to have a material effect on our consolidated
financial condition, results of operations or cash flows.
Future Application of Accounting Standards
Certain Obligations Resulting from Joint and Several Liability Arrangements
Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of an Investment
within a Foreign Entity or of an Investment in a Foreign Entity
Investment Company Guidance
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AIG 2013 Form 10-K222
ITEM 8 / NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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