Ameriprise 2012 Annual Report Download - page 125

events that coincide with the restructuring are considered in assessing whether the borrower can meet the new terms
which may result in the loan being returned to accrual status at the time of the restructuring or after a performance
period. If the borrower’s ability to meet the revised payment schedule is not reasonably assured, the loan remains on
nonaccrual status.
Separate Account Assets and Liabilities
Separate account assets and liabilities are primarily funds held for the exclusive benefit of variable annuity contractholders
and variable life insurance policyholders, who assume the related investment risk. Income and losses on separate account
assets accrue directly to the contractholder or policyholder and are not reported in the Company’s Consolidated
Statements of Operations. Separate account assets are recorded at fair value. Changes in the fair value of separate
account assets are offset by changes in the related separate account liabilities. The Company receives investment
management fees, mortality and expense risk fees, guarantee fees and cost of insurance charges from the related
accounts.
Included in separate account liabilities are investment liabilities of Threadneedle which represent the value of the units in
issue of the pooled pension funds that are offered by Threadneedle’s subsidiary, Threadneedle Pensions Limited.
Restricted and Segregated Cash and Investments
Total restricted cash at December 31, 2012 and 2011 was $107 million and $79 million, respectively, which cannot be
utilized for operations. The Company’s restricted cash at December 31, 2012 and 2011 was primarily cash held by
Threadneedle for the benefit of customers and cash that has been pledged to counterparties. At December 31, 2012 and
2011, amounts segregated under federal and other regulations were $2.4 billion and $1.7 billion, respectively, segregated
in special reserve bank accounts for the exclusive benefit of the Company’s brokerage customers.
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 39 years. At December 31, 2012 and 2011, land,
buildings, equipment and software were $753 million and $774 million, respectively, net of accumulated depreciation of
$1.2 billion and $1.1 billion, respectively. Depreciation and amortization expense for the years ended December 31, 2012,
2011 and 2010 was $152 million, $143 million and $160 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. The Company assesses various qualitative
factors to determine whether impairment is likely to have occurred. If impairment is likely to have occurred, the Company
uses 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 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, 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 or other liabilities. The
Company’s policy is to not offset fair value amounts recognized for derivatives and collateral arrangements executed with
the same counterparty under the same master netting arrangement. 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 (i) hedges of changes in the fair value of assets, liabilities,
or firm commitments (‘‘fair value hedges’’), (ii) 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 (iii) hedges of foreign currency exposures
of net investments in foreign operations (‘‘net investment hedges in foreign operations’’).
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