AIG 2010 Annual Report Download - page 243

American International Group, Inc., and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Accounting Standards Adopted During 2009
Business Combinations
In December 2007, the FASB issued an accounting standard that changed the accounting for business
combinations in a number of ways, including broadening the transactions or events that are considered business
combinations; requiring an acquirer to recognize 100 percent of the fair value of certain assets acquired, liabilities
assumed and noncontrolling (i.e., minority) interests; and recognizing contingent consideration arrangements at
their acquisition-date fair values with subsequent changes in fair value generally reflected in earnings, among other
changes.
AIG adopted the new business combination standard for business combinations for which the acquisition date is
on or after January 1, 2009. The adoption of the new standard did not have a material effect on AIG’s
consolidated financial position, results of operations or cash flows at and for the year ended December 31, 2009,
but will affect the future accounting for business combinations, if any, as well as goodwill impairment assessments.
See Note 5 herein for further discussion.
Noncontrolling Interests in Consolidated Financial Statements
In December 2007, the FASB issued an accounting standard that requires noncontrolling (i.e., minority)
interests in partially owned consolidated subsidiaries to be classified in the Consolidated Balance Sheet as a
separate component of equity, or in the mezzanine section of the Consolidated Balance Sheet (between liabilities
and equity) if such interests do not qualify for ‘‘permanent equity’’ classification. The new standard also specifies
the accounting treatment for subsequent acquisitions and sales of noncontrolling interests and how noncontrolling
interests should be presented in the Consolidated Statement of Income (Loss). The noncontrolling interests’ share
of subsidiary income (loss) should be reported as a part of consolidated Net income (loss) with disclosure of the
attribution of consolidated Net income (loss) to the controlling and noncontrolling interests on the face of the
Consolidated Statement of Income (Loss).
AIG adopted the new standard on January 1, 2009 and applied it prospectively, except for presentation and
disclosure requirements. The Consolidated Statement of Income (Loss) for the year ended December 31, 2008 has
been retrospectively recast to include net income (loss) attributable to both the controlling and noncontrolling
interests.
Noncontrolling interests also includes junior and senior non-voting, callable preferred interests issued in
connection with the $25 billion reduction in the outstanding balance and maximum borrowing commitment under
the FRBNY Credit Facility. See Note 17 herein for further discussion.
Disclosures about Derivative Instruments and Hedging Activities
In March 2008, the FASB issued an accounting standard that requires enhanced disclosures about (a) how and
why AIG uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for
and (c) how derivative instruments and related hedged items affect AIG’s consolidated financial condition, results
of operations, and cash flows. AIG adopted the new standard on January 1, 2009. See Note 12 herein for related
disclosures.
Accounting for Transfers of Financial Assets and Repurchase Financing Transactions
In February 2008, the FASB issued an accounting standard that requires an initial transfer of a financial asset
and a repurchase financing that was entered into contemporaneously with or in contemplation of the initial
transfer to be evaluated as a linked transaction unless certain criteria are met. AIG adopted the new standard for
new transactions entered into from that date forward. The adoption of the new standard did not have a material
effect on AIG’s consolidated financial condition, results of operations or cash flows.
AIG 2010 Form 10-K 227