JP Morgan Chase 2009 Annual Report Download - page 143

JPMorgan Chase & Co./2009 Annual Report 141
Employers’ disclosures about postretirement benefit plan
assets
In December 2008, the FASB issued guidance requiring more
detailed disclosures about employers’ plan assets, including invest-
ment strategies, classes of plan assets, concentrations of risk within
plan assets and valuation techniques used to measure their fair
value. This guidance is effective for fiscal years ending after De-
cember 15, 2009. The Firm adopted these additional disclosure
requirements on December 31, 2009, and it only affected JPMor-
gan Chase’s disclosures and not its Consolidated Balance Sheets or
results of operations. Refer to Note 8 on pages 184–191 of this
Annual Report for additional information.
The recognition and presentation of other-than-temporary
impairment
In April 2009, the FASB issued guidance which amends the other-
than-temporary impairment model for debt securities. Under the
guidance, an other-than-temporary-impairment must be recognized
if an investor has the intent to sell the debt security or if it is more
likely than not that it will be required to sell the debt security
before recovery of its amortized cost basis. In addition, the guid-
ance changes the amount of impairment to be recognized in cur-
rent-period earnings when an investor does not have the intent to
sell, or if it is more likely than not that it will not be required to sell
the debt security, as in these cases only the amount of the impair-
ment associated with credit losses is recognized in income. The
guidance also requires additional disclosures regarding the calcula-
tion of credit losses, as well as factors considered in reaching a
conclusion that an investment is not other-than-temporarily im-
paired. The guidance is effective for interim and annual reporting
periods ending after June 15, 2009, with early adoption permitted
for periods ending after March 15, 2009. The Firm elected to early
adopt the guidance as of January 1, 2009. For additional informa-
tion regarding the impact on the Firm of the adoption of the guid-
ance, see Note 11 on pages 195–199 of this Annual Report.
Determining fair value when the volume and level of
activity for the asset or liability have significantly
decreased, and identifying transactions that are not orderly
In April 2009, the FASB issued guidance for estimating fair value
when the volume and level of activity for an asset or liability have
significantly declined. The guidance also includes identifying cir-
cumstances that indicate a transaction is not orderly. The guidance
is effective for interim and annual reporting periods ending after
June 15, 2009, with early adoption permitted. The Firm elected to
early adopt the guidance in the first quarter of 2009. The applica-
tion of the guidance did not have an impact on the Firm’s Consoli-
dated Balance Sheets or results of operations.
Interim disclosures about fair value of financial
instruments
In April 2009, the FASB issued guidance that requires disclosures
about the fair value of certain financial instruments (including
financial instruments not carried at fair value) to be presented in
interim financial statements in addition to annual financial state-
ments. The guidance is effective for interim reporting periods end-
ing after June 15, 2009, with early adoption permitted for periods
ending after March 15, 2009. The Firm adopted the additional
disclosure requirements for second-quarter 2009 reporting.
Subsequent events
In May 2009, the FASB issued guidance that established general
standards of accounting for and disclosure of events that occur
after the balance sheet date but before financial statements are
issued or are available to be issued. The guidance was effective for
interim or annual financial periods ending after June 15, 2009. The
Firm adopted the guidance in the second quarter of 2009. The
application of the guidance did not have any impact on the Firm’s
Consolidated Balance Sheets or results of operations.
Accounting for transfers of financial assets and
consolidation of variable interest entities
In June 2009, the FASB issued guidance which amends the ac-
counting for the transfers of financial assets and the consolidation
of VIEs. The guidance eliminates the concept of QSPEs and provides
additional guidance with regard to accounting for transfers of
financial assets. The guidance also changes the approach for de-
termining the primary beneficiary of a VIE from a quantitative risk
and rewards-based model to a qualitative model, based on control
and economics. The guidance became effective for annual reporting
periods beginning after November 15, 2009, including all interim
periods within the first annual reporting period. The Firm adopted
the new guidance for VIEs on January 1, 2010, which required the
consolidation of the Firm’s credit card securitization trusts, bank-
administered asset-backed commercial paper conduits, and certain
mortgage and other consumer securitization entities. At adoption,
the Firm added approximately $88 billion of U.S. GAAP assets, and
stockholders’ equity decreased by approximately $4 billion.
In February 2010, the FASB finalized an amendment that defers
the requirements of the new consolidation guidance for determin-
ing the primary beneficiary of a VIE for certain investment funds,
including mutual funds, private equity funds and hedge funds. For
the funds included in the deferral, the Firm will continue to apply
other existing authoritative guidance to determine whether such
funds should be consolidated; as such, these funds are not in-
cluded in the above disclosure of the impact of adopting the new
guidance for VIEs.
For additional information about the impact to the Firm of the
adoption of the new guidance on January 1, 2010, see Note 16 on
pages 214–222 of this Annual Report.
Measuring liabilities at fair value
In August 2009, the FASB issued guidance clarifying how to de-
velop fair value measurements for liabilities, particularly where
there may be a lack of observable market information. This guid-
ance is effective for interim or annual periods beginning after
August 26, 2009. The Firm adopted the guidance in the third
quarter of 2009, and it did not have an impact on the Firm’s Con-
solidated Balance Sheets or results of operations.