Ameriprise 2015 Annual Report Download - page 132

evenly as service is provided over the contract period. Transaction based brokerage fees are recognized on the transaction
date.
Mortality and expense risk fees are generally calculated as a percentage of the fair value of assets held in separate
accounts and recognized when assessed.
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) are generally based on a contractual percentage of assets and recognized when earned. 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,
are recognized when assessed.
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 on auto and home insurance are net of reinsurance premiums and 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 recognized as revenue when due.
Variable annuity guaranteed benefit rider charges and cost of insurance charges on fixed and variable universal life
insurance (net of reinsurance premiums and cost of reinsurance for universal life products) are recognized as revenue
when assessed.
3. Recent Accounting Pronouncements
Adoption of New Accounting Standards
Transfers and Servicing
In June 2014, the Financial Accounting Standards Board (‘‘FASB’’) updated the accounting standards related to transfers
and servicing. The update requires repurchase-to-maturity transactions and linked repurchase financings to be accounted
for as secured borrowings consistent with the accounting for other repurchase agreements. The standard requires
disclosures related to transfers of financial assets accounted for as sales in transactions that are similar to repurchase
agreements. The standard also requires disclosures on the remaining contractual maturity of the agreements,
disaggregation of the gross obligation by class of collateral pledged and potential risks associated with the agreements and
the related collateral pledged in repurchase agreements, securities lending transactions, and repurchase-to-maturity
transactions accounted for as secured borrowings. The standard is effective for interim and annual periods beginning after
December 15, 2014, except for the disclosure requirements for repurchase agreements, security lending transactions and
repurchase-to-maturity transactions accounted for as secured borrowings which are effective for interim periods beginning
after March 15, 2015. The standard requires entities to present changes in accounting for transactions outstanding at the
effective date as a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. The
adoption of the standard did not have any effect on the Company’s consolidated results of operations and financial
condition. See Note 13 and Note 15 for the required disclosures.
Receivables — Troubled Debt Restructuring by Creditors
In January 2014, the FASB updated the accounting standard related to recognizing residential real estate obtained through
a repossession or foreclosure from a troubled debtor. The update clarifies the criteria for derecognition of the loan
receivable and recognition of the real estate property. The standard is effective for interim and annual periods beginning
after December 15, 2014 and can be applied under a modified retrospective transition method or a prospective transition
method. The adoption of the standard did not have any effect on the Company’s consolidated results of operations and
financial condition.
Investments — Equity Method and Joint Ventures
In January 2014, the FASB updated the accounting standard related to investments in qualified affordable housing
projects. The update allows for an accounting policy election to account for investments in qualified affordable housing
projects using the proportional amortization method if certain conditions are met. Under the proportional amortization
method, the investment in a qualified affordable housing project is amortized in proportion to the tax credits and other tax
benefits received. The net investment performance is recognized as a component of income tax expense (benefit). The
standard is effective for interim and annual periods beginning after December 15, 2014 and should be applied
retrospectively to all periods presented. The Company did not elect the proportional amortization method.
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