Discover 2015 Annual Report Download - page 159

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-143-
Level 3 Financial Instruments Only
Changes in Level 3 Assets and Liabilities Measure at Fair Value on a Recurring Basis
The following tables provide changes in the Company’s Level 3 assets and liabilities measured at fair value on a
recurring basis (dollars in millions):
For the Year Ended December 31, 2015
Balance at
December 31,
2014
Transfers
into
Level 3
Transfers
out of
Level 3
Total net
gains
included in
earnings Purchases Sales Settlements
Transfers
of IRLCs to
closed
loans
Balance at
December 31,
2015
Interest rate lock
commitments ...... $ 7 — — 71 — — 6 (84) $ —
Forward delivery
contracts ............ $ — — (1) 1 — — — — $ —
Mortgage loans
held for sale ....... $ — 5 — — 2 (6) (1) — $ —
For the Year Ended December 31, 2014
Balance at
December 31,
2013
Transfers
into
Level 3
Transfers
out of
Level 3
Total net
gains
included in
earnings Purchases Sales Settlements
Transfers
of IRLCs to
closed
loans
Balance at
December 31,
2014
Interest rate lock
commitments ...... $ 4 — — 87 — — 4 (88) $ 7
Forward delivery
contracts ............ $ — — (1) 1 — — — — $ —
Mortgage loans
held for sale ....... $ — 2 — — 1 (3) — — $ —
Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis
The Company also has assets that under certain conditions are subject to measurement at fair value on a non-
recurring basis. These assets include those associated with acquired businesses, including goodwill and other intangible
assets. For these assets, measurement at fair value in periods subsequent to the initial recognition of the assets is
applicable if one or more of the assets is determined to be impaired. During the year ended December 31, 2015, the
Company had no material impairments related to these assets. During the fourth quarter of 2014, the Company
determined that the fair value of goodwill associated with Discover Home Loans declined below its carrying value and
should be fully impaired. At December 31, 2014, the Company recorded an impairment charge of $27 million to other
expense, the amount required to adjust the asset’s value to zero.