Aetna 2014 Annual Report Download - page 86

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Annual Report- Page 80
2. Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying consolidated financial statements have been prepared in accordance with U.S. generally-
accepted accounting principles (“GAAP”) and include the accounts of Aetna and the subsidiaries that we control.
All significant intercompany balances have been eliminated in consolidation. The Company has evaluated
subsequent events from the balance sheet date through the date the financial statements were issued and determined
there were no other items to disclose other than as disclosed in Note 21 beginning on page 138.
Reclassifications
Certain reclassifications were made to 2012 and 2013 financial information to conform with 2014 presentation.
New Accounting Standards
Fees Paid to the Federal Government by Health Insurers
Effective January 1, 2014, we adopted new accounting guidance relating to the recognition and income statement
reporting of the mandated fee to be paid to the federal government by health insurers. This guidance applies to the
new health insurer fee (“HIF”) included in Health Care Reform. This new accounting guidance resulted in the
establishment on January 1, 2014, of a liability for our portion of the entire estimated 2014 annual HIF. This amount
is reflected in accrued expenses and other current liabilities with a corresponding amount reflected in other current
assets. The estimated annual HIF is amortized into general and administrative expenses on a straight-line basis with
a corresponding reduction in other current assets. The HIF for 2014 was paid in September 2014 and is not tax
deductible.
Amendments to the Scope, Measurement and Disclosure Requirements of Investment Companies
Effective January 1, 2014, we adopted new accounting guidance relating to the approach for determining whether
an entity is considered an investment company for accounting purposes. This guidance clarified the characteristics
and set measurement and disclosure requirements for an investment company for accounting purposes. The
adoption of this new guidance did not have an impact on our financial position or operating results.
Future Application of Accounting Standards
Accounting for Investments in Qualified Affordable Housing Projects
Effective January 1, 2015, we were permitted to make an accounting policy election to adopt new accounting
guidance relating to the recognition of amortization of investments in qualified affordable housing projects. The
guidance sets forth a new method of measurement, referred to as the proportional amortization method, under which
income and expense items related to qualified affordable housing projects would be recorded in the income taxes
line item. We will not be making the accounting policy election to adopt this new accounting guidance.
Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity
Effective January 1, 2015, we will adopt amended accounting guidance related to when an entity reports a
discontinued operation in its financial position and operating results. The guidance clarifies that a discontinued
operation is required to be reported if the disposal represents a significant shift that has (or will have) a major effect
on an entity’s operations and financial results when a component of an entity or a group of components of an entity
are either classified as held for sale or are disposed of by sale. The amendments also require additional disclosures
about discontinued operations. If we have a discontinued operation after January 1, 2015, these changes could result
in increased reporting and disclosure requirements in our financial statements.
Revenue from Contracts with Customers
Effective January 1, 2017, we will adopt new accounting guidance related to revenue recognition from contracts
with customers. This new guidance removes most industry-specific revenue recognition requirements (insurance
contracts are not covered by this guidance) and requires that an entity recognize revenue for the transfer of goods or
services to a customer at an amount that reflects the consideration to which an entity expects to be entitled in
exchange for the goods or services. The new guidance also requires additional disclosures regarding the nature,
amount, timing and uncertainty of revenue and cash flows arising from customer contracts. The new guidance