Ameriprise 2008 Annual Report Download - page 114

Restricted and Segregated Cash
Total restricted cash at December 31, 2008 and 2007 was $99 million and $279 million, respectively, which cannot be
utilized for operations. The Company’s restricted cash at December 31, 2008 and 2007 primarily related to certain
consolidated limited partnerships. At December 31, 2008 and 2007, amounts segregated under federal and other
regulations reflect resale agreements and cash of $1.8 billion and $1.1 billion, respectively, segregated in special bank
accounts for the benefit of the Company’s brokerage customers. The Company’s policy is to take possession of securities
purchased under agreements to resell. Such securities are valued daily and additional collateral is obtained when appropriate.
Land, Buildings, Equipment and Software
Land, buildings, equipment and internally developed or purchased software are carried at cost less accumulated depreciation
or amortization and are reflected within other assets. The Company generally uses the straight-line method of depreciation
and amortization over periods ranging from three to 30 years. At December 31, 2008 and 2007, land, buildings, equipment
and software were $824 million and $849 million, respectively, net of accumulated depreciation of $860 million and
$757 million, respectively. Depreciation and amortization expense for the years ended December 31, 2008, 2007 and 2006
was $169 million, $146 million and $126 million, respectively.
Goodwill and Other Intangible Assets
Goodwill represents the amount of an acquired company’s acquisition cost in excess of the fair value of assets acquired and
liabilities assumed. The Company evaluates goodwill for impairment annually on the measurement date of July 1 and
whenever events and circumstances indicate that an impairment may have occurred, such as a significant adverse change in
the business climate or a decision to sell or dispose of a reporting unit. In determining whether impairment has occurred, the
Company uses a combination of the market approach and the discounted cash flow method, a variation of the income
approach.
Intangible assets are amortized over their estimated useful lives unless they are deemed to have indefinite useful lives. The
Company evaluates the definite lived intangible assets remaining useful lives annually on the measurement date of July 1 and
tests for impairment whenever events and circumstances indicate that an impairment may have occurred, such as a
significant adverse change in the business climate. For definite lived intangible assets subject to amortization, impairment to
fair value is recognized if the carrying amount is not recoverable. Indefinite lived intangibles are also tested for impairment
annually or whenever circumstances indicate an impairment may have occurred. Impairment is recognized by the amount
carrying value exceeds fair value.
Goodwill and other intangible assets are reflected in other assets.
Derivative Instruments and Hedging Activities
Freestanding derivative instruments are recorded at fair value and are reflected in other assets and other liabilities. See
Note 18 for information regarding the Company’s fair value measurement of derivative instruments. The accounting for
changes in the fair value of a derivative instrument depends on its intended use and the resulting hedge designation, if any.
The Company primarily uses derivatives as economic hedges that are not designated as accounting hedges or do not qualify
for hedge accounting treatment. The Company occasionally designates derivatives as (1) hedges of changes in the fair value
of assets, liabilities, or firm commitments (‘‘fair value hedges’’), (2) hedges of a forecasted transaction or of the variability of
cash flows to be received or paid related to a recognized asset or liability (‘‘cash flow hedges’’), or (3) hedges of foreign
currency exposures of net investments in foreign operations (‘‘net investment hedges in foreign operations’’).
For derivative instruments that do not qualify for hedge accounting or are not designated as hedges, changes in fair value are
recognized in current period earnings. Changes in fair value of derivatives hedging variable annuity living benefits, equity
indexed annuities and stock market certificates are included within benefits, claims, losses and settlement expenses, interest
credited to fixed accounts and banking and deposit interest expense, respectively. Changes in fair value of all other derivatives
are a component of net investment income.
For derivative instruments that qualify as fair value hedges, changes in the fair value of the derivatives, as well as of the
corresponding hedged assets, liabilities or firm commitments, are recognized in current earnings. If a fair value hedge
designation is removed or the hedge is terminated prior to maturity, previous adjustments to the carrying value of the hedged
item are recognized into earnings over the remaining life of the hedged item.
For derivative instruments that qualify as cash flow hedges, the effective portions of the gain or loss on the derivative
instruments are reported in accumulated other comprehensive income (loss) and reclassified into earnings when the hedged
91