Ameriprise 2014 Annual Report Download - page 133

The Company may receive performance-based incentive management fees on certain management contracts. Performance
fees are paid when specific performance hurdles are met. We recognize performance fees on the date the fee is no longer
subject to adjustment. Any performance fees received are not subject to repayment or any other clawback provisions.
Certain management and financial advice fees are charged based on an annual fee or a transaction fee. These fees
include financial planning, certain custodial and fund administration and brokerage fees. Fees from financial planning
services are recognized when the financial plan is delivered. Annual custodial and fund administration fees are recognized
evenly as service is provided over the contract period. Transaction based brokerage fees are recognized on the transaction
date.
Distribution Fees
Distribution fees primarily include point-of-sale fees (such as mutual fund front-end sales loads) and asset-based fees
(such as 12b-1 distribution and shareholder service fees) that are generally based on a contractual percentage of assets
and recognized when earned. Distribution fees also include amounts received under marketing support arrangements for
sales of mutual funds and other companies’ products, such as through the Company’s wrap accounts, as well as surrender
charges on fixed and variable universal life insurance and annuities, which are recognized when assessed.
Net Investment Income
Net investment income primarily includes interest income on fixed maturity securities classified as Available-for-Sale,
mortgage loans, policy and certificate loans, other investments, cash and cash equivalents and investments of
consolidated investment entities; the changes in fair value of trading securities, certain derivatives and certain assets and
liabilities of consolidated investment entities; the pro rata share of net income or loss on equity method investments; and
realized gains and losses on the sale of securities and charges for other-than-temporary impairments of investments
related to credit losses. Interest income is accrued as earned using the effective interest method, which makes an
adjustment of the yield for security premiums and discounts on all performing fixed maturity securities classified as
Available-for-Sale so that the related security or loan recognizes a constant rate of return on the outstanding balance
throughout its term. Realized gains and losses on securities, other than trading securities and equity method investments,
are recognized using the specific identification method on a trade date basis.
Premiums
Premiums include premiums on auto and home insurance, traditional life and health (DI and LTC) insurance and immediate
annuities with a life contingent feature. Premiums on auto and home insurance are net of reinsurance premiums and are
recognized ratably over the coverage period. Premiums on traditional life, health insurance and immediate annuities with a
life contingent feature are net of reinsurance ceded and are recognized as revenue when due.
Other Revenues
Other revenues primarily include variable annuity guaranteed benefit rider charges and fixed and variable universal life
insurance charges, which consist of cost of insurance charges (net of reinsurance and cost of reinsurance for UL insurance
products) and administrative and surrender charges. These charges are recognized as revenue when assessed. The
Company also records revenue related to consolidated property funds managed by Threadneedle. These revenues primarily
represent rental income of managed properties and are recognized on a straight line basis over the term of the lease.
3. Recent Accounting Pronouncements
Adoption of New Accounting Standards
Income Taxes
In July 2013, the Financial Accounting Standards Board (‘‘FASB’’) updated the accounting standard for income taxes. The
update provides guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss
carryforward, a similar tax loss, or a tax credit carryforward exists. The standard is effective for interim and annual periods
beginning after December 15, 2013 and should be applied prospectively to all unrecognized tax benefits that exist at the
effective date. Retrospective application is permitted. The Company adopted the standard in the first quarter of 2014. The
adoption of the standard did not have a material impact on the Company’s consolidated results of operations and financial
condition.
Investment Companies
In June 2013, the FASB updated the accounting standard related to investment companies. The standard provides a new
two-tiered approach for determining whether a company is an investment company and requires new disclosures for
investment companies. The guidance does not directly apply to the Company and did not impact investment entities that
the Company consolidates. The standard is effective for interim and annual periods beginning after December 15, 2013
114