Travelers 2014 Annual Report Download - page 172

Table of Contents
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets within a foreign
entity. When a company ceases to have a controlling financial interest in a subsidiary within a foreign entity, the company should recognize any
related cumulative translation adjustment into net income only if the sale or transfer results in the complete or substantially complete liquidation of
the foreign entity in which the subsidiary had resided. Upon the partial sale of an equity method investment that is a foreign entity, the company
should release into earnings a pro rata portion of the cumulative translation adjustment. Upon the partial sale of an equity method investment that
is not a foreign entity, the company should release into earnings the cumulative translation adjustment if the partial sale represents a complete or
substantially complete liquidation of the foreign entity that holds the equity method investment. The updated guidance was effective for the
quarter ending March 31, 2014. The adoption of this guidance did not have any effect on the Company's results of operations, financial position or
liquidity.
Accounting Standards Not Yet Adopted
Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity
In April 2014, the FASB issued revised guidance to reduce diversity in practice for reporting discontinued operations. Under the previous
guidance, any component of an entity that was a reportable segment, an operating segment, a reporting unit, a subsidiary or an asset group was
eligible for discontinued operations presentation. The revised guidance only allows disposals of components of an entity that represent a strategic
shift (e.g., disposal of a major geographical area, a major line of business, a major equity method investment, or other major parts of an entity) and
that have a major effect on a reporting entity's operations and financial results to be reported as discontinued operations. The revised guidance
also requires expanded disclosure in the financial statements for discontinued operations as well as for disposals of significant components of an
entity that do not qualify for discontinued operations presentation. The updated guidance is effective for the quarter ending March 31, 2015. The
adoption of this guidance is not expected to have a material effect on the Company's results of operations, financial position or liquidity.
Revenue from Contracts with Customers
In May 2014, the FASB issued updated guidance to clarify the principles for recognizing revenue. While insurance contracts are not within the
scope of this updated guidance, the Company's fee income related to providing claims and policy management services as well as claim and loss
prevention services will be subject to this updated guidance.
The updated guidance requires an entity to recognize revenue as performance obligations are met, in order to reflect the transfer of promised
goods or services to customers in an amount that reflects the consideration the entity is entitled to receive for those goods or services. The
following steps are applied in the updated guidance: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the
contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize
revenue when, or as, the entity satisfies a performance obligation.
The updated guidance is effective for the quarter ending March 31, 2017. The adoption of this guidance is not expected to have a material
effect on the Company's results of operations, financial position or liquidity.
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