AIG 2012 Annual Report Download - page 238

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Level 3 valuation inputs. The new disclosure requirements were applied prospectively. The standard became
effective beginning on January 1, 2012. The standard did not have any effect on our consolidated financial condition,
results of operations or cash flows. See Note 6 for additional information related to fair value measurements.
Presentation of Comprehensive Income
In June 2011, the FASB issued an accounting standard that requires the presentation of comprehensive income
either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In
the two-statement approach, the first statement should present total net income and its components, followed
consecutively by a second statement that presents total other comprehensive income and its components. The
standard became effective beginning January 1, 2012 with retrospective application required. The standard did not
have any effect on our consolidated financial condition, results of operations or cash flows.
Testing Goodwill for Impairment
In September 2011, the FASB issued an accounting standard that amends the approach to testing goodwill for
impairment. The standard simplifies how entities test goodwill for impairment by permitting an entity to first assess
qualitative factors to determine whether it is more likely than not the fair value of a reporting unit is less than its
carrying amount as a basis for determining whether it is necessary to perform the quantitative, two-step goodwill
impairment test. The standard became effective for annual and interim goodwill impairment tests performed for fiscal
years beginning after December 15, 2011. The adoption of the standard did not have any effect on our consolidated
financial condition, results of operations or cash flows.
Accounting Standards Adopted During 2011
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In January 2010, the FASB issued an accounting standard that requires fair value disclosures about significant
transfers between Level 1 and 2 measurement categories and separate presentation of purchases, sales, issuances,
and settlements within the rollforward of Level 3 activity. Also, this fair value guidance clarifies the disclosure
requirements about the level of disaggregation and valuation techniques and inputs. This guidance became effective
for us beginning on January 1, 2010, except for the disclosures about purchases, sales, issuances, and settlements
within the rollforward of Level 3 activity, which became effective for us beginning on January 1, 2011. See Note 6 for
additional information related to fair value measurements.
In April 2010, the FASB issued an accounting standard that clarifies that an insurance company should not combine
any investments held in separate account interests with its interest in the same investment held in its general
account when assessing the investment for consolidation. Separate accounts represent funds for which investment
income and investment gains and losses accrue directly to the policyholders who bear the investment risk. The
standard also provides guidance on how an insurer should consolidate an investment fund when the insurer
concludes that consolidation of an investment is required and the insurer’s interest is through its general account in
addition to any separate accounts.
In April 2011, the FASB issued an accounting standard that amends the guidance for a creditor’s evaluation of
whether a restructuring is a troubled debt restructuring and requires additional disclosures about a creditor’s troubled
debt restructuring activities. The standard clarifies the two criteria used to determine whether a modification or
restructuring is a troubled debt restructuring: (i) whether the creditor has granted a concession and (ii) whether the
debtor is experiencing financial difficulties.
The adoption of these standards did not have a material effect on our consolidated financial condition, results of
operations or cash flows.
Accounting Standards Adopted During 2010
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In June 2009, the FASB issued an accounting standard addressing transfers of financial assets that removes the
concept of a qualifying special-purpose entity (QSPE) from the FASB Accounting Standards Codification and
removes the exception that exempted transferors from applying the consolidation rules to QSPEs.
In March 2010, the FASB issued an accounting standard that amends the accounting for embedded credit derivative
features in structured securities that redistribute credit risk in the form of subordination of one financial instrument to
another. The standard clarifies how to determine whether embedded credit derivative features, including those in
collateralized debt obligations (CDOs), credit-linked notes (CLNs), synthetic CDOs and CLNs and other synthetic
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AIG 2012 Form 10-K 221
ITEM 8 / NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES