AIG 2014 Annual Report Download - page 239

ITEM 8 / NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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qualifies as an investment company. Entities that are not regulated under the 1940 Act must have certain fundamental
characteristics and must consider other characteristics to determine whether they qualify as investment companies. An entity’s
purpose and design must be considered when making the assessment.
An entity that no longer meets the requirements to be an investment company as a result of this standard should present the
change in its status as a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. An
entity that is an investment company should apply the standard prospectively as an adjustment to opening net assets as of the
effective date. The adjustment to net assets represents both the difference between the fair value and the carrying amount of
the entity’s investments and any amount previously recognized in Accumulated other comprehensive income.
We adopted the standard on its required effective date of January 1, 2014 on a prospective basis. The adoption of this
standard had no material effect on our consolidated financial condition, results of operations or cash flows.
Presentation of Unrecognized Tax Benefits
In July 2013, the FASB issued an accounting standard that requires a liability related to unrecognized tax benefits to be
presented as a reduction to the related deferred tax asset for a net operating loss carryforward or a tax credit carryforward.
When the carryforwards are not available at the reporting date under the tax law of the applicable jurisdiction or the tax law of
the applicable jurisdiction does not require, and the entity does not intend to use, the deferred tax asset for such purpose, the
unrecognized tax benefit will be presented in the financial statements as a liability and will not be combined with the related
deferred tax asset.
We adopted the standard on its required effective date of January 1, 2014 on a prospective basis. The adoption of this
standard had no material effect on our consolidated financial condition, results of operations or cash flows.
Future Application of Accounting Standards
Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure
In January 2014, the FASB issued an accounting standard that clarifies that a creditor is considered to have received physical
possession of residential real estate property collateralizing a consumer mortgage loan, so that the loan is derecognized and
the real estate property is recognized, when either (i) the creditor obtains legal title to the residential real estate property upon
completion of a foreclosure or (ii) the borrower conveys all interest in the residential real estate property to the creditor to
satisfy the loan through completion of a deed in lieu of foreclosure or through a similar legal agreement.
The standard is effective for interim and annual reporting periods beginning after December 15, 2014. Early adoption is
permitted. We plan to adopt the standard on its required effective date of January 1, 2015 and do not expect the adoption of
the standard to have a material effect on our consolidated financial condition, results of operations or cash flows.
Reporting Discontinued Operations
In April 2014, the FASB issued an accounting standard that changes the requirements for presenting a component or group of
components of an entity as a discontinued operation and requires new disclosures. Under the standard, the disposal of a
component or group of components of an entity should be reported as a discontinued operation if the disposal represents a
strategic shift that has (or will have) a major effect on an entity’s operations and financial results. Disposals of equity method
investments, or those reported as held-for-sale, must be presented as a discontinued operation if they meet the new definition.
The standard also requires entities to provide disclosures about the disposal of an individually significant component of an
entity that does not qualify for discontinued operations presentation.
The standard is effective prospectively for all disposals of components (or classification of components as held-for-sale) of an
entity that occur within interim and annual periods beginning on or after December 15, 2014. Early adoption is permitted, but
only for disposals (or classifications of components as held-for-sale) that have not been reported in financial statements