Ameriprise 2014 Annual Report Download - page 127

(i) the present value of its expected principal and interest payments discounted at the loan’s effective interest rate, (ii) the
fair value of collateral or (iii) the loan’s observable market price.
Restructured Loans
A loan is classified as a restructured loan when the Company makes certain concessionary modifications to contractual
terms for borrowers experiencing financial difficulties. When the interest rate, minimum payments, and/or due dates have
been modified in an attempt to make the loan more affordable to a borrower experiencing financial difficulties, the
modification is considered a troubled debt restructuring. Generally, performance prior to the restructuring or significant
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.
Included in separate account assets and liabilities is the fair value of the pooled pension funds that are offered by
Threadneedle’s subsidiary, Threadneedle Pensions Limited.
Restricted and Segregated Cash and Investments
Amounts segregated under federal and other regulations are held 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 uses the straight-line method of
depreciation and amortization over periods ranging from three to 39 years. At December 31, 2014 and 2013, land,
buildings, equipment and software were $667 million and $705 million, respectively, net of accumulated depreciation of
$1.4 billion and $1.3 billion, respectively. Depreciation and amortization expense for the years ended December 31, 2014,
2013 and 2012 was $144 million, $144 million and $152 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. Impairment is the amount carrying value
exceeds fair value. The Company assesses various qualitative factors to determine whether impairment is likely to have
occurred. If impairment were to occur, the Company would use 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.
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
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