Ally Bank 2014 Annual Report Download - page 113

Table of Contents
Notes to Consolidated Financial Statements
Ally Financial Inc. • Form 10-K
101
awards, the awards require liability treatment and are remeasured quarterly at fair value until they are paid, with changes in fair value charged
to compensation expense in the period in which the change occurs. Refer to Note 24 for a discussion of our share-based compensation plans.
Foreign Exchange
Foreign-denominated assets and liabilities resulting from foreign-currency transactions are valued using period-end foreign-exchange
rates and the results of operations and cash flows are determined using approximate weighted average exchange rates for the period.
Translation adjustments are related to foreign subsidiaries using local currency as their functional currency and are reported as a separate
component of accumulated other comprehensive income. We may elect to enter into foreign-currency derivatives to mitigate our exposure to
changes in foreign-exchange rates. Refer to Derivative Instruments and Hedging Activities above for a discussion of our hedging activities of
the foreign-currency exposure of a net investment in a foreign operation.
Recently Adopted Accounting Standards
Liabilities — Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the
Obligation Is Fixed at the Reporting Date (ASU 2013-04)
As of January 1, 2014, we adopted Accounting Standards Update (ASU) 2013-04. The guidance within the ASU requires an entity to
measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of
this guidance is fixed at the reporting date, as the sum of the following: (a) The amount the reporting entity agreed to pay on the basis of its
arrangement among its co-obligors and (b) any additional amount the reporting entity expects to pay on behalf of its co-obligors. The
amendments were effective retrospectively for all arrangements within its scope. It further requires an entity to disclose the nature and amount
of the obligation as well as other information about those obligations. The adoption of this guidance did not have a material effect on our
consolidated financial condition or results of operations.
Foreign Currency Matters — Parent's Accounting for the Cumulative Translation Adjustment upon Derecognition of
Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity (ASU 2013-05)
As of January 1, 2014, we adopted ASU 2013-05. The guidance within the ASU closes diversity in practice in this area and requires a
reporting entity that ceases to have a controlling financial interest, in a subsidiary or group of assets or a business, within a foreign entity to
release any related Cumulative Translation Adjustment (CTA) into net income. The CTA should be released into net income only if the sale or
transfer results in the complete or substantially complete liquidation of the foreign entity. For an equity method investment that is a foreign
entity, a pro rata portion of the CTA should be released into net income upon a partial sale of such an investment. This ASU further clarifies
that the sale of an investment in a foreign entity includes both events that result in the loss of a controlling financial interest in a foreign entity,
irrespective of any retained investment, and events that result in step acquisition under which an acquirer obtains control of an acquiree in
which it held an equity interest immediately before the acquisition date. Under these circumstances, the CTA should be released into net
income upon their occurrence. The amendments are to be applied prospectively for all transactions within its scope. The adoption of this
guidance did not have a material effect on our consolidated financial condition or results of operations.
Income Taxes — Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax
Loss, or a Tax Credit Carryforward Exists (ASU 2013-11)
As of January 1, 2014, we adopted ASU 2013-11. The guidance within the ASU closes diversity in practice and requires an unrecognized
tax benefit, or a portion of an unrecognized tax benefit, to be presented in the financial statements as a reduction to a deferred tax asset for a
net operating loss carryforward, a similar tax loss, or a tax credit carryforward. The guidance further includes an exception that if a net
operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available to settle any additional income taxes that would
result from the disallowance of a tax position at the reporting date or the tax law of the applicable jurisdiction does not require the entity to
use them and the entity does not intend to use them, the unrecognized tax benefit for such purpose should be presented in the financial
statements as a liability and should not be combined with deferred tax assets. The assessment of whether a deferred tax asset is available is
based on the unrecognized tax benefit and deferred tax asset that exist at the reporting date and should be made presuming disallowance of the
tax position at the reporting date. The amendments are to be applied prospectively to all unrecognized tax benefits that exist at the effective
date. The adoption of this guidance did not have a material effect on our consolidated financial condition or results of operations.
Investments — Accounting for Investments in Qualified Affordable Housing Projects (ASU 2014-01)
As of January 1, 2014, we adopted ASU 2014-01. The amendments in this ASU allow an entity to make an accounting policy election to
account for investments in qualified affordable housing projects using a proportional amortization method, if certain conditions are met.
Under the election, the entity would amortize the initial cost of the investment in proportion to the tax credits and other benefits received
while recognizing the net investment performance in the statement of comprehensive income as a component of income tax expense. The
amendments are to be applied retrospectively to all periods presented. We have elected to utilize the proportional amortization method for
qualifying affordable housing investments and therefore will be presenting the amortization and tax impacts of such investments as a
component of income tax expense under the proportional amortization method. The adoption of this guidance did not have a material effect
on our consolidated financial condition or results of operations.