Ameriprise 2008 Annual Report Download - page 112

activity in its Consolidated Statements of Cash Flows. The Company has reclassified the net of origination and principal
collection of consumer banking loans and credit card receivables as an investing activity in accordance with Statement of
Financial Accounting Standards (‘‘SFAS’’) No. 95 ‘‘Statement of Cash Flows’’ and SFAS No. 104 ‘‘Statement of Cash Flows—
Net Reporting of Certain Cash Receipts and Cash Payments and Classification of Cash Flows from Hedging Transactions.’’
2. Summary of Significant Accounting Policies
Principles of Consolidation
The Company consolidates all entities in which it holds a greater than 50% voting interest, or when certain conditions are met
for VIEs and limited partnerships, except for immaterial seed money investments in mutual funds, which are accounted for as
trading securities. Entities in which the Company holds a greater than 20% but less than 50% voting interest are accounted
for under the equity method. Additionally, other investments in hedge funds in which the Company holds an interest that is
less than 50% are accounted for under the equity method. All other investments that are not reported at fair value as trading
or Available-for-Sale securities are accounted for under the cost method where the Company owns less than a 20% voting
interest and does not exercise significant influence.
The Company consolidates all VIEs for which it is considered to be the primary beneficiary. The determination as to whether an
entity is a VIE is based on the amount and nature of the Company’s equity investment in the entity. The Company also
considers other characteristics such as the ability to influence the decision making about the entity’s activities and how the
entity is financed. The determination as to whether the Company is considered to be the primary beneficiary is based on
whether the Company will absorb a majority of the VIE’s expected losses, receive a majority of the VIE’s expected residual
return or both. See Note 6 for additional information about the Company’s VIEs.
The Company consolidates certain limited partnerships that are not VIEs, for which the Company is the general partner and is
determined to control the limited partnership. As a general partner, the Company is presumed to control the limited
partnership unless the limited partners have the ability to dissolve the partnership or have substantive participating rights.
All material intercompany transactions and balances between or among Ameriprise Financial and its subsidiaries and affiliates
have been eliminated in consolidation.
Foreign Currency Translation
Net assets of foreign subsidiaries, whose functional currency is other than the U.S. dollar, are translated into U.S. dollars
based upon exchange rates prevailing at the end of each year. The resulting translation adjustment, along with any related
hedge and tax effects, are included in accumulated other comprehensive income (loss). Revenues and expenses are
translated at average exchange rates during the year.
Amounts Based on Estimates and Assumptions
Accounting estimates are an integral part of the Consolidated Financial Statements. In part, they are based upon
assumptions concerning future events. Among the more significant are those that relate to investment securities valuation
and recognition of other-than-temporary impairments, valuation of deferred acquisition costs (‘‘DAC’’) and the corresponding
recognition of DAC amortization, derivative instruments and hedging activities, litigation and claims reserves and income
taxes and the recognition of deferred tax assets and liabilities. These accounting estimates reflect the best judgment of
management and actual results could differ.
Cash and Cash Equivalents
Cash equivalents include time deposits and other highly liquid investments with original maturities of 90 days or less.
Investments
Investments consist of the following:
Available-for-Sale Securities
Available-for-Sale securities are carried at fair value with unrealized gains (losses) recorded in accumulated other
comprehensive income (loss), net of income tax provision (benefit) and net of adjustments in other asset and liability
balances, such as DAC, to reflect the expected impact on their carrying values had the unrealized gains (losses) been realized
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