Capital One 2011 Annual Report Download - page 176

CAPITAL ONE FINANCIAL CORPORATION
NOTES TO CONSOLIDATED STATEMENTS—(Continued)
offset in the balance sheet as well as instruments and transactions subject to an agreement similar to a master
netting arrangement. The disclosures will be required irrespective of whether such instruments are presented
gross or net on the balance sheet. The guidance is effective for annual and interim reporting periods beginning on
or after January 1, 2013, with comparative retrospective disclosures required for all periods presented. Our
adoption of the guidance will have no effect on our financial condition, results of operations or liquidity since it
impacts disclosures only.
Goodwill Impairment
In September 2011, the FASB issued guidance that is intended to simplify goodwill impairment testing by
providing entities with the option to first assess qualitatively whether it is necessary to perform the two-step
quantitative analysis currently required. If an entity chooses to perform a qualitative assessment and determines
that it is more likely than not that the fair value of a reporting period is less than its carrying amount, the
quantitative two-step goodwill impairment test is required. Otherwise, goodwill is deemed to be not impaired and
no further evaluation analysis would be necessary. The amended goodwill impairment guidance does not affect
the manner in which a company estimates fair value. The amended guidance is effective for annual and interim
goodwill impairment tests performed for fiscal years beginning after December 15, 2011, with early adoption
permitted. We intend to adopt the amended guidance on January 1, 2012. We had $13.6 billion in goodwill as of
December 31, 2011, the value of which will not be affected by the adoption of this standard.
Presentation of Comprehensive Income
In June 2011, the FASB issued new accounting guidance that revises the manner in which comprehensive income
is required to be presented in financial statements. The new guidance will require companies to present the
components of net income and other comprehensive income either as one continuous statement or as two
consecutive statements. The guidance eliminates the option to present components of other comprehensive
income in the statement of changes in stockholders’ equity. It does not change the items which must be reported
in other comprehensive income, how such items are measured or when they must be reclassified from other
comprehensive income to net income. The guidance requires retrospective application and is effective for interim
and annual periods beginning on or after December 15, 2011. We intend to adopt the guidance in the first quarter
of 2012. Our adoption of the guidance will have no effect on our financial condition, results of operations or
liquidity since it impacts presentation only.
Fair Value Measurement: Amendments to Achieve Common Fair Value Measurement and Disclosure
Requirements in U.S. GAAP and International Financial Reporting Standards (“IFRS”)
In May 2011, the FASB issued amended guidance on fair value that is intended to provide a converged fair value
framework for U.S. GAAP and IFRS. The amended guidance results in a consistent definition of fair value and
common requirements for measurement of and disclosure about fair value between U.S. GAAP and IFRS. While
the amended guidance continues to define fair value as an exit price, it changes some fair value measurement
principles and expands the existing disclosure requirements for fair value measurements. The amended guidance
is effective for public entities during interim and annual periods beginning after December 15, 2011, with early
adoption prohibited. The new guidance requires prospective application and disclosure in the period of adoption
of the change, if any, in valuation techniques and related inputs resulting from application of the amendments
and quantification of the total effect, if practicable. We intend to adopt the amended guidance in the first quarter
of 2012, and are currently assessing the impact that the adoption will have on our consolidated financial
statements.
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