Fannie Mae 2009 Annual Report Download - page 296

Reclassification and Adoption of New Accounting Pronouncements
Pursuant to our January 1, 2009 adoption of the FASB standard requiring noncontrolling interests to be
classified as a separate component of equity, we reclassified amounts related to noncontrolling interests in our
consolidated balance sheet as of December 31, 2008. Amounts previously reported as “Minority interests in
consolidated subsidiaries” are now reported as “Noncontrolling interest.” Additionally, amounts reported in our
consolidated statement of operations for the year ended December 31, 2008 as “Minority interest in losses of
consolidated subsidiaries” are now reported as “Net loss attributable to the noncontrolling interest.”
We reclassified $6.5 billion from “Other assets” to “Servicer and MBS trust receivable” and $6.4 billion from
“Other liabilities” to “Servicer and MBS trust payable” as of December 31, 2008 in our consolidated balance
sheet to conform to the current period presentation. Also, we reclassified $7.0 billion and $814 million for the
years ended December 31, 2008 and 2007, respectively, from “Investment gains (losses), net” to “Net other-
than-temporary impairments” in our consolidated statements of operations to conform to the current period
presentation.
We reclassified $4.5 billion and $529 million, net of tax, for the years ended December 31, 2008 and 2007,
respectively, from “Changes in net unrealized loss on available-for-sale securities” to “Reclassification
adjustment for other-than-temporary impairments recognized in net loss” in our Consolidated Statements of
Changes in Stockholders’ Equity (Deficit) to conform to the current period presentation.
New Accounting Pronouncements
Transfers of Financial Assets and Consolidation Standards
Effective January 1, 2010, we prospectively adopted two new accounting standards that eliminated the concept
of QSPEs and amended the accounting for transfers of financial assets and the consolidation model for VIEs.
Under these new accounting standards, the consolidation exemption for QSPEs was removed. All formerly
designated QSPEs must be evaluated for consolidation in accordance with the new consolidation model, which
changes the method of analyzing which party to a VIE should consolidate the VIE. The current consolidation
model is replaced with a qualitative evaluation that requires consolidation of an entity when the reporting
enterprise both (1) has the power to direct matters which significantly impact the activities and success of the
entity, and (2) has exposure to benefits and/or losses that could potentially be significant to the entity.
The new accounting standards require the incremental assets and liabilities consolidated upon adoption to
initially be reported at their carrying values. If determining the carrying amounts is not practicable, the assets
and liabilities of the VIE shall be measured at fair value at the date the new standards first apply. However, if
determining the carrying amounts is not practicable, and if the activities of the consolidated entity are
primarily related to securitizations or other forms of asset-backed financings and the assets of the entity can be
used only to settle obligations of the consolidated entity, then the assets and liabilities of the consolidated
entity may be measured at their unpaid principal balances at the date the new standards first apply. For the
outstanding MBS trusts we consolidated effective January 1, 2010, we initially recorded the assets and
liabilities on our consolidated balance sheet at their unpaid principal balances, where applicable, as it is not
practicable to determine their carrying values. Accrued interest, allowance for loan losses or other-than-
temporary impairments have also been recognized as appropriate. In addition, other assets and liabilities which
did not have an unpaid principal balance or were required to be carried at fair value have been be measured at
fair value at adoption.
The adoption of these new accounting standards will have a significant impact on the presentation of our
consolidated financial statements beginning in 2010. Because the concept of a QSPE is eliminated, our
existing QSPEs, primarily our MBS trusts, are subject to the new consolidation standards. Based on our
analysis, we are required to consolidate the substantial majority of our MBS trusts and record the underlying
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FANNIE MAE
(In conservatorship)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)