Morgan Stanley 2014 Annual Report Download - page 89

Accounting Development Updates.
Amendments to the Consolidation Analysis.
In February 2015, the Financial Accounting Standards Board (the “FASB”) issued an amendment update that
changes the analysis that the Company must perform to determine whether it should consolidate certain types of
legal entities. The Company is required to reevaluate its interests in legal entities in scope of the new guidance
under the revised consolidation model. The guidance is effective for the Company beginning January 1, 2016.
Early adoption is permitted. The Company is currently evaluating the potential impact of adopting this
amendment update.
Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share
Is More Akin to Debt or to Equity.
In November 2014, the FASB issued an accounting update requiring entities to determine the nature of the host
contract in a hybrid financial instrument issued in the form of a share by considering the economic characteristics
and risks of the entire hybrid financial instrument, including the embedded derivative feature that is being
evaluated for separate accounting from the host contract, when evaluating whether the host contract is more akin
to debt or equity and whether the economic characteristics and risks of the embedded derivative feature are
clearly and closely related to the host contract. The guidance is effective for the Company beginning on
January 1, 2016 and must be applied on a modified retrospective basis. The guidance may be applied on a full
retrospective basis to all relevant prior periods and early adoption is permitted. This guidance is not expected to
have a material impact on the Company’s consolidated financial statements.
Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.
In August 2014, the FASB issued an accounting update that provides guidance on management’s responsibility
in evaluating whether there is substantial doubt about a company’s ability to continue as a going concern and the
related footnote disclosures. For each reporting period, management will be required to evaluate whether there
are conditions or events that raise substantial doubt about a company’s ability to continue as a going concern
within one year from the date the financial statements are issued. The guidance is effective for the Company
beginning January 1, 2017. Early adoption is permitted. This guidance is not expected to have a material impact
on the Company’s consolidated financial statements.
Measuring the Financial Assets and Financial Liabilities of a Consolidated Collateralized Financing
Entity.
In August 2014, the FASB issued an accounting update to clarify the measurement upon initial consolidation and
subsequent measurement of the financial assets and the financial liabilities of a collateralized financing entity
when the reporting entity has determined that it is the primary beneficiary of the collateralized financing entity.
This guidance is effective for the Company beginning January 1, 2016. Early adoption is permitted. The adoption
of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.
Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target
Could Be Achieved after the Requisite Service Period.
In June 2014, the FASB issued an accounting update clarifying that entities should treat performance targets that
could be met after the requisite service period of a share-based payment award as performance conditions that
affect vesting. Therefore, an entity would not record compensation expense (measured as of the grant date) for an
award where transfer to the employee is contingent upon satisfaction of the performance target until it becomes
probable that the performance target will be met. The guidance is effective for the Company beginning January 1,
2016. Early adoption is permitted. This guidance is not expected to have a material impact on the Company’s
consolidated financial statements.
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