Capital One 2008 Annual Report Download - page 106

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In September 2008, the FASB issued FSP No. FAS 133-1 and FIN 45-4, Disclosures about Credit Derivatives and Certain
Guarantees: An Amendment of FASB Statement No. 133 and FASB Interpretation No. 45; and Clarification of the Effective Date of
FASB Statement No. 161. FSP FAS 133-1 and FIN 45-4 requires enhanced disclosures about credit derivatives and guarantees and
amends FASB Interpretation No. 45, Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others (FIN 45) to exclude credit derivative instruments accounted for at fair value under SFAS
133. The FSP is effective for financial statements issued for reporting periods ending after November 15, 2008. The adoption of FSP
FAS 133-1 did not have a material impact on the consolidated earnings or financial position of the Company. FIN 45-4 only requires
additional disclosures concerning guarantees, which did not have an impact on the consolidated earnings or financial position of the
Company because it only amends the disclosure requirements. See Note 19 for additional detail.
Effective January 1, 2008, the Company adopted SFAS No. 157, Fair Value Measurements (SFAS 157) for all financial assets and
liabilities and for nonfinancial assets and liabilities measured at fair value on a recurring basis. Under FSP No. FAS 157-2, Effective
Date of FASB Statement No. 157 (FSP 157-2), the Company elected to defer the adoption of SFAS 157 for nonfinancial assets and
nonfinancial liabilities measured on a nonrecurring basis until January 1, 2009. The adoption of SFAS 157 for nonfinancial assets and
nonfinancial liabilities measured on a nonrecurring basis is not expected to have a material impact on the Company. SFAS 157 defines
fair value, establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. The
initial adoption of SFAS 157 did not have a material impact on the consolidated earnings and financial position of the Company.
There are no material assets or liabilities recognized or disclosed at fair value for which the Company has not applied the provisions of
SFAS 157. See Note 12 for additional detail.
Effective January 1, 2008, the Company adopted SFAS No. 159, The Fair Value Option for Financial Assets and Liabilities (SFAS
159). SFAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value with changes
in fair value included in current earnings. The election is made on specified election dates, can be made on an instrument by
instrument basis, and is irrevocable. The initial adoption of SFAS 159 did not have a material impact on the consolidated earnings and
financial position of the Company. See Note 12 for additional detail.
In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities-an amendment of
FASB Statement No. 133, (SFAS 161). This Statement changes the disclosure requirements for derivative and hedging activities.
Entities are required to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative
instruments and related hedged items are accounted for under SFAS 133 and its related interpretations, and (c) how derivative
instruments and related hedged items affect an entitys financial position, financial performance, and cash flows. This Statement is
effective for fiscal years, and interim periods within those fiscal years, beginning after November 15, 2008. The adoption of SFAS 161
will not have an impact on the consolidated earnings or financial position of the Company because it only amends the disclosure
requirements for derivatives and hedged items.
In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statementsan amendment
of ARB No. 51, (SFAS 160). This Statement applies to all entities that prepare consolidated financial statements, except not-for-
profit organizations, but will affect only those entities that have an outstanding noncontrolling interest in one or more subsidiaries or
that deconsolidate a subsidiary. This Statement amends ARB 51 to establish accounting and reporting standards for the noncontrolling
interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an
ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. This Statement
is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. The adoption of
SFAS 160 did not have a material impact on the consolidated earnings or financial position of the Company.
In December 2007, the FASB issued SFAS No. 141(R), Business Combinations (SFAS 141(R)). This Statement replaces SFAS 141,
Business Combinations. It retains the fundamental requirements in SFAS 141; however, the scope is broader than that of SFAS 141 by
applying to all transactions and other events in which one entity obtains control over one or more other businesses. SFAS 141(R)
requires an acquirer to recognize the assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at the
acquisition date, at their fair values as of that date, with limited exceptions, thereby replacing SFAS 141s cost-allocation process.
This Statement also changes the requirements for recognizing acquisition related costs, restructuring costs, and assets acquired and
liabilities assumed arising from contingencies. It also changes the accounting for step acquisitions. The Company will apply the
provisions of SFAS 141(R) to the Chevy Chase Bank F.S.B., acquisition.
In September 2006, the FASB issued SFAS No. 158, Employers Accounting for Defined Benefit Pension and Other Postretirement
Plans, an amendment of FASB Statements No 87, 88, 106, and 132(R), (SFAS 158). SFAS 158 requires plan sponsors of defined
benefit pension and other postretirement benefit plans (collectively, defined benefit plans) to recognize the funded status of their
defined benefit plans in the Consolidated Balance Sheet, measure the fair value of plan assets and benefit obligations as of the date of
the fiscal year-end Consolidated Balance Sheet, and provide additional disclosures. On December 31, 2006, the Company adopted the
recognition and disclosure provisions of SFAS 158. The effect of adopting SFAS 158 on the Companys financial condition for the
years ended December 31, 2007 and 2006, has been included in the accompanying consolidated financial statements. SFAS 158 did
not have an effect on the Companys consolidated financial condition at December 31, 2005. SFAS 158s provisions regarding the
change in the measurement date of defined benefit plans are effective for fiscal years ending after December 15, 2008. The adoption
of SFAS 158 did not have a material impact on the consolidated earnings or financial position of the Company. See Note 11 for
further discussion.