eTrade 2009 Annual Report Download - page 116

Subsequent Events
In May 2009, the FASB established general standards of accounting and disclosure for events that occur
after the balance sheet date but before financial statements are issued (subsequent events). The two types of
subsequent events include those that provide additional evidence about conditions that existed at the date of the
balance sheet, including the estimates inherent in the process of preparing financial statements (recognized
subsequent events), and those that provide evidence about conditions that did not exist at the date of the balance
sheet but arose after that date (nonrecognized subsequent events). The Company’s adoption of the general
standards of accounting and disclosure for subsequent events in the second quarter of 2009 did not impact its
financial condition, results of operations or cash flows.
Accounting for Transfers of Financial Assets
In June 2009, the FASB amended the derecognition provisions in the accounting guidance for transfers and
servicing, including the removal of the concept of qualifying special-purpose entities (“QSPEs”). The amended
derecognition provisions will be effective for financial asset transfers occurring after the beginning of the first
fiscal year that begins after November 15, 2009, or January 1, 2010 for the Company. The Company’s adoption
of the amended derecognition provisions to transfers of financial assets, which did not impact its financial
condition, results of operations or cash flows, will be applied to transfers of financial assets occurring on or after
January 1, 2010.
Consolidation of Variable Interest Entities
In June 2009, the FASB amended the accounting and disclosure guidance for the consolidation of variable
interest entities. The amended accounting guidance requires the reconsideration of previous conclusions related
to the consolidation of variable interest entities, including whether an entity is a variable interest entity and
whether the Company is the variable interest entity’s primary beneficiary. The amended accounting guidance
carries forward the scope of the previous accounting guidance for the consolidation of variable interest entities
with the addition of entities previously considered QSPEs. The amended accounting and disclosure guidance will
be effective as of the beginning of the first fiscal year that begins after November 15, 2009, or January 1, 2010
for the Company. The Company’s reconsideration of previous conclusions related to the consolidation of variable
interest entities will not result in the consolidation of additional entities as of January 1, 2010. Beginning on
January 1, 2010, the Company’s assessment of whether it is a variable interest entity’s primary beneficiary will
be ongoing and will consider changes in facts and circumstances related to the variable interest entities.
The FASB Accounting Standards Codification™ and the Hierarchy of GAAP
In June 2009, the FASB established the FASB Accounting Standards Codification™ (“the Codification”) as
the source of authoritative GAAP. Rules and interpretative releases of the SEC under federal securities laws also
continue to be a source of authoritative GAAP for the Company. All guidance contained in the Codification
carries an equal level of authority. This Codification became effective for financial statements issued for interim
and annual periods ending after September 15, 2009, or September 30, 2009 for the Company. The Company’s
adoption of the Codification as the source of authoritative GAAP did not impact its financial condition, results of
operations or cash flows.
Fair Value Measurements and Disclosures–Measuring Liabilities at Fair Value
In August 2009, the FASB amended the fair value measurements accounting guidance for measuring the fair
value of liabilities. The amended accounting guidance clarifies that the quoted price for an identical liability,
when traded as an asset in an active market, is also a Level 1 measurement for that liability when no adjustment
to the quoted price is required. In the absence of a Level 1 measurement, the amended accounting guidance
clarifies that the Company must use a valuation technique that uses a quoted price or a valuation technique based
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