Wells Fargo 2009 Annual Report Download - page 100

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Note 1: Summary of Significant Accounting Policies (continued)
Accounting Standards Adopted in 
In first quarter 2009, we adopted new guidance related to the
following Codification topics:
• FASB ASC 815-10, Derivatives and Hedging (FAS 161,
Disclosures about Derivative Instruments and Hedging
Activities – an amendment of FASB Statement No. 133);
• FASB ASC 810-10, Consolidation (FAS 160, Noncontrolling
Interests in Consolidated Financial Statements – an
amendment of ARB No. 51);
• FASB ASC 805-10, Business Combinations (FAS 141R
(revised 2007), Business Combinations);
• FASB ASC 820-10, Fair Value Measurements and
Disclosures (FASB Staff Position (FSP) FAS 157-4,
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);
• FASB ASC 320-10, Investments – Debt and Equity
Securities (FSP FAS 115-2 and FAS 124-2, Recognition and
Presentation of Other-Than-Temporary Impairments); and
• FASB ASC 260-10, Earnings Per Share (FSP Emerging
Issues Task Force (EITF) 03-6-1, Determining Whether
Instruments Granted in Share-Based Payment Transactions
Are Participating Securities).
In second quarter 2009, we adopted new guidance related
to the following Codification topics:
• FASB ASC 855-10, Subsequent Events (FAS 165,
Subsequent Events); and
• FASB ASC 825-10, Financial Instruments (FSP FAS 107-1
and APB Opinion 28-1, Interim Disclosures about Fair Value
of Financial Instruments).
In third quarter 2009, we adopted new guidance related to
the following Codification topic:
• FASB ASC 105-10, Generally Accepted Accounting
Principles (FAS 168, The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted
Accounting Principles – a replacement of FASB Statement
No. 162).
In fourth quarter 2009, we adopted the following new
accounting guidance:
• Accounting Standards Update (ASU or Update) 2009-12,
Investments in Certain Entities That Calculate Net Asset
Value per Share (or Its Equivalent);
• ASU 2009-5, Measuring Liabilities at Fair Value; and
• FASB ASC 715-20, Compensation – Retirement Benefits
(FSP FAS 132(R)-1, Employers’ Disclosures about
Postretirement Benefit Plan Assets).
Information about these pronouncements is described in
more detail below.
FASB ASC 815-10 (FAS 161) changes the disclosure require-
ments for derivative instruments and hedging activities. It
requires enhanced disclosures about how and why an entity
uses derivatives, how derivatives and related hedged items
are accounted for, and how derivatives and hedged items
affect an entity’s financial position, performance and cash
flows. We adopted this pronouncement for first quarter 2009
reporting. See Note 15 in this Report for complete disclosures
on derivatives and hedging activities. This standard does not
affect our consolidated financial statements since it amends
only the disclosure requirements for derivative instruments
and hedged items.
FASB ASC 810-10 (FAS 160) requires that noncontrolling
interests (previously referred to as minority interests) be
reported as a component of equity in the balance sheet. Prior
to our adoption of this standard, noncontrolling interests
were classified outside of equity. This new guidance also
changes the way a noncontrolling interest is presented in the
income statement such that a parent’s consolidated income
statement includes amounts attributable to both the parent’s
interest and the noncontrolling interest. When a subsidiary
is deconsolidated, a parent is required to recognize a gain
or loss with any remaining interest initially recorded at fair
value. Other changes in ownership interest where the parent
continues to have a majority ownership interest in the sub-
sidiary are accounted for as equity transactions. This new
guidance was effective on January 1, 2009, with prospective
application to all noncontrolling interests including those
that arose prior to the adoption. Retrospective adoption was
required for disclosure of noncontrolling interests held as of
the adoption date.
During 2009, we held a controlling interest in a joint
venture with Prudential Financial, Inc. (Prudential). On
January 1, 2009, we reclassified Prudential’s noncontrolling
interest to equity. Under the terms of the original agreement
under which the joint venture was established between
Wachovia and Prudential, each party had certain rights such
that changes in our ownership interest could occur. On
December 4, 2008, Prudential publicly announced its inten-
tion to exercise its option to put its noncontrolling interest to
us at the end of the lookback period, as defined (January 1,
2010). As a result of the issuance of new accounting guidance
for noncontrolling interests, related interpretive guidance,
and Prudential’s stated intention, on January 1, 2009, we
increased the carrying value of Prudential’s noncontrolling
interest in the joint venture to the estimated maximum
redemption amount, with the offset recorded to additional
paid-in capital. On December 31, 2009, we purchased
Prudential’s noncontrolling interest for $4.5 billion in cash.
We now own 100% of the retail securities brokerage business
in the joint venture.