Goldman Sachs 2012 Annual Report Download - page 118

Notes to Consolidated Financial Statements
Foreign Currency Translation
Assets and liabilities denominated in non-U.S. currencies
are translated at rates of exchange prevailing on the date of
the consolidated statements of financial condition and
revenues and expenses are translated at average rates of
exchange for the period. Foreign currency remeasurement
gains or losses on transactions in nonfunctional currencies
are recognized in earnings. Gains or losses on translation of
the financial statements of a non-U.S. operation, when the
functional currency is other than the U.S. dollar, are
included, net of hedges and taxes, in the consolidated
statements of comprehensive income.
Cash and Cash Equivalents
The firm defines cash equivalents as highly liquid overnight
deposits held in the ordinary course of business. As of
December 2012 and December 2011, “Cash and cash
equivalents” included $6.75 billion and $7.95 billion,
respectively, of cash and due from banks, and
$65.92 billion and $48.05 billion, respectively, of
interest-bearing deposits with banks.
Recent Accounting Developments
Reconsideration of Effective Control for Repurchase
Agreements (ASC 860). In April 2011, the FASB issued
ASU No. 2011-03, “Transfers and Servicing (Topic 860) —
Reconsideration of Effective Control for Repurchase
Agreements.” ASU No. 2011-03 changes the assessment of
effective control by removing (i) the criterion that requires
the transferor to have the ability to repurchase or redeem
financial assets on substantially the agreed terms, even in
the event of default by the transferee, and (ii) the collateral
maintenance implementation guidance related to that
criterion. ASU No. 2011-03 was effective for periods
beginning after December 15, 2011. The firm adopted the
standard on January 1, 2012. Adoption of ASU
No. 2011-03 did not affect the firm’s financial condition,
results of operations or cash flows.
Amendments to Achieve Common Fair Value
Measurement and Disclosure Requirements in U.S.
GAAP and IFRSs (ASC 820). In May 2011, the FASB
issued ASU No. 2011-04, “Fair Value Measurements and
Disclosures (Topic 820) — Amendments to Achieve
Common Fair Value Measurement and Disclosure
Requirements in U.S. GAAP and IFRSs.” ASU No. 2011-04
clarifies the application of existing fair value measurement
and disclosure requirements, changes certain principles
related to measuring fair value, and requires additional
disclosures about fair value measurements. ASU
No. 2011-04 was effective for periods beginning after
December 15, 2011. The firm adopted the standard on
January 1, 2012. Adoption of ASU No. 2011-04 did not
materially affect the firm’s financial condition, results of
operations or cash flows.
Derecognition of in Substance Real Estate (ASC 360).
In December 2011, the FASB issued ASU No. 2011-10,
“Property, Plant, and Equipment (Topic 360) —
Derecognition of in Substance Real Estate — a Scope
Clarification.” ASU No. 2011-10 clarifies that in order to
deconsolidate a subsidiary (that is in substance real estate)
as a result of a parent no longer controlling the subsidiary
due to a default on the subsidiary’s nonrecourse debt, the
parent also must satisfy the sale criteria in ASC 360-20,
“Property, Plant, and Equipment — Real Estate Sales.” The
ASU was effective for fiscal years beginning on or after
June 15, 2012. The firm will apply the provisions of the
ASU to such events occurring on or after January 1, 2013.
Since the ASU applies only to events occurring on or after
January 1, 2013, adoption did not affect the firm’s financial
condition, results of operations or cash flows.
Disclosures about Offsetting Assets and Liabilities
(ASC 210). In December 2011, the FASB issued ASU
No. 2011-11, “Balance Sheet (Topic 210) — Disclosures
about Offsetting Assets and Liabilities.” ASU No. 2011-11,
as amended by ASU 2013-01, “Balance Sheet (Topic 210):
Clarifying the Scope of Disclosures about Offsetting Assets
and Liabilities,” requires disclosure of the effect or potential
effect of offsetting arrangements on the firm’s financial
position as well as enhanced disclosure of the rights of
setoff associated with the firm’s recognized derivative
instruments, including bifurcated embedded derivatives,
repurchase agreements and reverse repurchase agreements,
and securities borrowing and lending transactions. ASU
No. 2011-11 is effective for periods beginning on or after
January 1, 2013. Since these amended principles require
only additional disclosures concerning offsetting and
related arrangements, adoption will not affect the firm’s
financial condition, results of operations or cash flows.
116 Goldman Sachs 2012 Annual Report