Citibank 2012 Annual Report Download - page 181

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The Company elected to account for these beneficial interests under the
fair value option beginning July 1, 2010 for various reasons, including:
•฀ To reduce the operational burden of assessing beneficial interests for
bifurcation under the guidance in the ASU;
•฀ Where bifurcation would otherwise be required under the ASU, to avoid
the complicated operational requirements of bifurcating the embedded
derivatives from the host contracts and accounting for each separately.
The Company reclassified substantially all beneficial interests where
bifurcation would otherwise be required under the ASU; and
•฀ To permit more economic hedging strategies without generating volatility
in reported earnings.
Additional Disclosures Regarding Fair Value Measurements
In January 2010, the FASB issued ASU No. 2010-06, Improving Disclosures
about Fair Value Measurements. The ASU requires disclosure of the
amounts of significant transfers in and out of Levels 1 and 2 of the fair value
hierarchy and the reasons for the transfers. The disclosures were effective
for reporting periods beginning after December 15, 2009. Additionally,
disclosures of the gross purchases, sales, issuances and settlements activity in
Level 3 of the fair value measurement hierarchy were required for fiscal years
beginning after December 15, 2010. The Company adopted ASU 2010-06 as
of January 1, 2010. The required disclosures are included in Note 25 to the
Consolidated Financial Statements.
Non-Consolidation of Certain Investment Funds
The FASB issued ASU No. 2010-10, Consolidation (Topic 810):
Amendments for Certain Investment Funds in the first quarter of 2010.
ASU 2010-10 provides a deferral of the requirements of SFAS 167 where the
following criteria are met:
•฀ The entity being evaluated for consolidation is an investment company,
as defined in ASC 946-10, Financial Services—Investment Companies,
or an entity for which it is acceptable based on industry practice to apply
measurement principles that are consistent with an investment company;
•฀ The reporting enterprise does not have an explicit or implicit obligation
to fund losses of the entity that could potentially be significant to the
entity; and
•฀ The entity being evaluated for consolidation is not:
– a securitization entity;
– an asset-backed financing entity; or
– an entity that was formerly considered a qualifying special-purpose
entity.
The Company has determined that a majority of the investment entities
managed by Citigroup are provided a deferral from the requirements of
SFAS 167 because they meet these criteria. These entities continue to be
evaluated under the requirements of FIN 46(R) (ASC 810-10), prior to the
implementation of SFAS 167.
Where the Company has determined that certain investment vehicles are
subject to the consolidation requirements of SFAS 167, the consolidation
conclusions reached upon initial application of SFAS 167 are consistent with
the consolidation conclusions reached under the requirements of ASC 810-
10, prior to the implementation of SFAS 167.