Morgan Stanley 2014 Annual Report Download - page 98

Intangible Assets.Amortizable intangible assets are amortized over their estimated useful lives and are
reviewed for impairment on an interim basis when certain events or circumstances exist. An impairment exists
when the carrying amount of the intangible asset exceeds its fair value. An impairment loss will be recognized
only if the carrying amount of the intangible asset is not recoverable and exceeds its fair value. The carrying
amount of the intangible asset is not recoverable if it exceeds the sum of the expected undiscounted cash flows.
For both goodwill and intangible assets, to the extent an impairment loss is recognized, the loss establishes the
new cost basis of the asset. Subsequent reversal of impairment losses is not permitted. For amortizable intangible
assets, the new cost basis is amortized over the remaining useful life of that asset. Adverse market or economic
events could result in impairment charges in future periods.
See Notes 2, 4 and 9 to the Company’s consolidated financial statements in Item 8 for additional information
about goodwill and intangible assets.
Legal and Regulatory Contingencies.
In the normal course of business, the Company has been named, from time to time, as a defendant in various
legal actions, including arbitrations, class actions and other litigation, arising in connection with its activities as a
global diversified financial services institution.
Certain of the actual or threatened legal actions include claims for substantial compensatory and/or punitive
damages or claims for indeterminate amounts of damages. In some cases, the entities that would otherwise be the
primary defendants in such cases are bankrupt or in financial distress.
The Company is also involved, from time to time, in other reviews, investigations and proceedings (both formal
and informal) by governmental and self-regulatory agencies regarding the Company’s business, and involving,
among other matters, sales and trading activities, financial products or offerings sponsored, underwritten or sold
by the Company, and accounting and operational matters, certain of which may result in adverse judgments,
settlements, fines, penalties, injunctions or other relief.
Accruals for litigation and regulatory proceedings are generally determined on a case-by-case basis. Where
available information indicates that it is probable a liability had been incurred at the date of the consolidated
financial statements and the Company can reasonably estimate the amount of that loss, the Company accrues the
estimated loss by a charge to income. In many proceedings, however, it is inherently difficult to determine
whether any loss is probable or even possible or to estimate the amount of any loss. For certain legal proceedings
and investigations, the Company can estimate possible losses, additional losses, ranges of loss or ranges of
additional loss in excess of amounts accrued. For certain other legal proceedings and investigations, the
Company cannot reasonably estimate such losses, particularly for proceedings and investigations where the
factual record is being developed or contested or where plaintiffs or government entities seek substantial or
indeterminate damages, restitution, disgorgement or penalties. Numerous issues may need to be resolved,
including through potentially lengthy discovery and determination of important factual matters, determination of
issues related to class certification and the calculation of damages or other relief, and by addressing novel or
unsettled legal questions relevant to the proceedings or investigations in question, before a loss or additional loss
or range of loss or additional loss can be reasonably estimated for a proceeding or investigation.
Significant judgment is required in deciding when and if to make these accruals and the actual cost of a legal
claim or regulatory fine/penalty may ultimately be materially different from the recorded accruals.
See Note 13 to the Company’s consolidated financial statements in Item 8 for additional information on legal
proceedings.
94