Ameriprise 2014 Annual Report Download - page 134

and is required to be applied prospectively. The adoption of the standard did not have a material impact on the Company’s
consolidated results of operations and financial condition.
Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts
In October 2010, the FASB updated the accounting standard for DAC. Under this new standard, only the following costs
incurred in the acquisition of new and renewal insurance contracts are capitalizable as DAC: (i) incremental direct costs of
a successful contract acquisition, (ii) portions of employees’ compensation and benefits directly related to time spent
performing acquisition activities (that is, underwriting, policy issuance and processing, medical and inspection, and contract
selling) for a contract that has been acquired, (iii) other costs related to acquisition activities that would not have been
incurred had the acquisition of the contract not occurred, and (iv) advertising costs that meet the capitalization criteria in
other GAAP guidance for certain direct-response marketing. All other acquisition related costs are expensed as incurred.
The Company retrospectively adopted the new standard on January 1, 2012. The cumulative effect of the adoption
reduced retained earnings by $1.4 billion after-tax and increased AOCI by $113 million after-tax, totaling to a $1.3 billion
after-tax reduction in total equity at January 1, 2012.
Future Adoption of New Accounting Standards
Consolidation
In February 2015, the FASB updated the accounting standard for consolidation. The update changes the accounting for
the consolidation model for limited partnerships and VIEs and excludes certain money market funds out of the
consolidation analysis. Specific to the consolidation analysis of a VIE, the update clarifies consideration of fees paid to a
decision maker and amends the related party guidance. The standard is effective for periods beginning after December 15,
2015. Early adoption is permitted, including adoption in an interim period. The standard may be applied using a modified
retrospective approach by recording a cumulative-effect adjustment to equity at the beginning of the period of adoption or
applied retrospectively. The Company is currently evaluating the impact of the standard on its consolidated results of
operations and financial condition.
In August 2014, the FASB updated the accounting standard related to consolidation of collateralized financing entities. The
update applies to reporting entities that consolidate a collateralized financing entity and measures all financial assets and
liabilities of the collateralized financing entity at fair value. The update provides a measurement alternative which would
allow an entity to measure both the financial assets and financial liabilities at the fair value of the more observable of the
fair value of the financial assets or financial liabilities. When the measurement alternative is elected, the reporting entity’s
net income should reflect its own economic interests in the collateralized financing entity, including changes in the fair
value of the beneficial interests retained by the reporting entity and beneficial interests that represent compensation for
services. If the measurement alternative is not elected, the financial assets and financial liabilities should be measured
separately in accordance with the requirements of the fair value topic. Any difference in the fair value of the assets and
liabilities would be recorded to net income attributable to the reporting entity. The standard is effective for interim and
annual periods beginning after December 15, 2015 and early adoption is permitted as of the beginning of an annual
period. The Company will adopt the measurement alternative and does not expect the adoption to have a material impact
on its consolidated results of operations and financial condition. The Company is still evaluating if it will early adopt the
standard.
Presentation of Financial Statements — Going Concern
In August 2014, the FASB updated the accounting standard related to an entity’s assessment of its ability to continue as a
going concern. The standard requires that management evaluate whether there are conditions or events, considered in the
aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the
date that the financial statements are issued. In situations where there is substantial doubt about an entity’s ability to
continue as a going concern, disclosure should be made so that a reader can understand the conditions that raise
substantial doubt, management’s assessment of those conditions and any plan management has to mitigate those
conditions. The standard is effective for the annual period ending after December 15, 2016, and for annual periods and
interim periods thereafter. Early adoption is permitted. The adoption of the standard is not expected to have a material
impact on the Company’s consolidated results of operations and financial condition.
Compensation — Stock Compensation
In June 2014, the FASB updated the accounting standards related to stock compensation. The update clarifies the
accounting for share-based payments with a performance target that could be achieved after the requisite service period.
The update specifies the performance target should not be reflected in estimating the grant-date fair value of the award.
Instead, the probability of achieving the performance target should impact vesting of the award. The standard is effective
for interim and annual periods beginning after December 15, 2015 and early adoption is permitted. The adoption of the
standard is not expected to have a material impact on the Company’s consolidated results of operations and financial
condition.
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