Ameriprise 2009 Annual Report Download - page 111

Notes to Consolidated Financial Statements
1. Basis of Presentation
Ameriprise Financial, Inc. is a holding company, which primarily conducts business through its subsidiaries to provide financial planning
and products and services that are designed to be utilized as solutions for clients’ cash and liquidity, asset accumulation, income,
protection and estate and wealth transfer needs. The Company’s foreign operations in the United Kingdom are conducted through its
subsidiary, Threadneedle Asset Management Holdings S` arl (‘‘Threadneedle’’).
The accompanying Consolidated Financial Statements include the accounts of Ameriprise Financial, Inc., companies in which it directly
or indirectly has a controlling financial interest, variable interest entities (‘‘VIEs’’) in which it is the primary beneficiary and certain
limited partnerships for which it is the general partner (collectively, the ‘‘Company’’). Noncontrolling interests are the ownership interests
in subsidiaries not attributable, directly or indirectly, to Ameriprise Financial, Inc. and are classified as equity within the Consolidated
Balance Sheets. The Company excluding noncontrolling interests (‘‘Ameriprise Financial’’) includes ownership interests in subsidiaries
that are attributable, directly or indirectly, to Ameriprise Financial, Inc.
The accompanying Consolidated Financial Statements are prepared in accordance with U.S. generally accepted accounting principles
(‘‘GAAP’’). Certain reclassifications of prior year amounts have been made to conform to the current presentation.
The Company evaluated events or transactions that may have occurred after the balance sheet date for potential recognition or disclosure
through February 23, 2010, the date the financial statements were issued.
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 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.
Generally, a VIE is a corporation, partnership, trust or any other legal structure that either does not have equity investors with substantive
voting rights or has equity investors that do not provide sufficient financial resources for the entity to support its activities. To determine
whether the Company must consolidate a VIE, it analyzes the design of the VIE to identify the variable interests it holds. Then the
Company quantitatively determines whether its variable interests will absorb a majority of the VIE’s variability. If the Company
determines it will absorb a majority of the VIE’s expected variability, the Company consolidates the VIE and is referred to as the primary
beneficiary. The calculation of variability is based on an analysis of projected probability-weighted cash flows based on the design of the
particular VIE.
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. The total accumulated other comprehensive loss, net of tax, related to foreign currency translation adjustments was $30 million and
$85 million as of December 31, 2009 and 2008, respectively. During the fourth quarter of 2008, the Company terminated the hedges of
net investment in foreign operations recording a gain of $142 million in other comprehensive income (loss). For the years ended
96 ANNUAL REPORT 2009