Morgan Stanley 2009 Annual Report Download - page 164

MORGAN STANLEY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Under the accounting guidance effective prior to January 1, 2010, the Company was required to reassess whether
it was the primary beneficiary of a VIE only upon the occurrence of certain reconsideration events. Under the
guidance adopted on January 1, 2010, the Company is required to reassess whether it is the primary beneficiary
on an ongoing basis and not just upon the occurrence of certain events.
If the Company’s initial assessment resulted in a determination that it was not the primary beneficiary of a VIE,
then under the guidance effective prior to January 1, 2010, the Company reassessed this determination upon the
occurrence of:
• Changes to the VIE’s governing documents or contractual arrangements in a manner that reallocated the
obligation to absorb the expected losses or the right to receive the expected residual returns of the VIE
between the primary beneficiary at that time and the other variable interest holders, including the
Company.
• Acquisition by the Company of additional variable interests in the VIE.
If the Company’s initial assessment resulted in a determination that it was the primary beneficiary, then under the
guidance effective prior to January 1, 2010, the Company reassessed this determination upon the occurrence of:
• Changes to the VIE’s governing documents or contractual arrangements in a manner that reallocated the
obligation to absorb the expected losses or the right to receive the expected residual returns of the VIE
between the primary beneficiary at that time and the other variable interest holders.
• A sale or disposition by the Company of all or part of its variable interests in the VIE to parties unrelated
to the Company.
• The issuance of new variable interests by the VIE to parties unrelated to the Company.
Except for consolidated VIEs included in other structured financings in the tables below, the Company accounts
for the assets held by the entities primarily in Financial instruments owned and the liabilities of the entities as
Other secured financings in the consolidated statements of financial condition. The Company includes assets held
by consolidated VIEs included in other structured financings in the tables below primarily in Receivables,
Premises, equipment and software costs and Other assets and the liabilities primarily as Other liabilities and
accrued expenses and Payables in the consolidated statements of financial condition. Except for consolidated
VIEs included in other structured financings, the assets and liabilities are measured at fair value, with changes in
fair value reflected in earnings.
The assets owned by many consolidated VIEs cannot be removed unilaterally by the Company and are not generally
available to the Company. The related liabilities issued by many consolidated VIEs are non-recourse to the
Company. In certain other consolidated VIEs, the Company has the unilateral right to remove assets or provides
additional recourse through derivatives such as total return swaps, guarantees or other forms of involvement.
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