Fifth Third Bank 2014 Annual Report Download - page 101

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
99 Fifth Third Bancorp
Pushdown Accounting
In November 2014, the FASB issued amended guidance on whether
and at what threshold an acquired entity that is a business or
nonprofit activity can apply pushdown accounting in its separate
financial statements upon the occurrence of an event in which an
acquirer (an individual or an entity) obtains control of the acquired
entity. The amended guidance provides that an acquired entity may
elect the option to apply pushdown accounting in the reporting
period in which the change-in-control event occurs. An acquired
entity should determine whether to elect to apply pushdown
accounting for each individual change-in-control event in which an
acquirer obtains control of the acquired entity. If pushdown
accounting is not applied in the reporting period in which the
change-in-control event occurs, an acquired entity will have the
option to elect to apply pushdown accounting in a subsequent
reporting period to the acquired entity’s most recent change-in-
control event. An election to apply pushdown accounting in a
reporting period after the reporting period in which the change-in-
control event occurred should be considered a change in accounting
principle. If pushdown accounting is applied to an individual
change-in-control event, that election is irrevocable. If an acquired
entity elects the option to apply pushdown accounting in its separate
financial statements, it should disclose information in the current
reporting period that enables users of financial statements to
evaluate the effect of pushdown accounting. The amended guidance
was effective upon issuance, and the adoption of the amended
guidance did not have a material impact on the Bancorp’s
Consolidated Financial Statements.
Determining Whether the Host Contract in a Hybrid Financial Instrument
Issued in the Form of a Share is More Akin to Debt or Equity
In November 2014, the FASB issued amended guidance that
clarifies how current GAAP should be interpreted in evaluating the
economic characteristics and risks of a host contract in a hybrid
financial instrument that is issued in the form of a share.
Specifically, the amendments clarify that an entity should consider
all relevant terms and features—including the embedded derivative
features being evaluated for bifurcation—in evaluating the nature of
the host contract. Furthermore, the amendments clarify that no
single term or feature would necessarily determine the economic
characteristics and risks of the host contract. Rather, the nature of
the host contract depends upon the economic characteristics and
risks of the entire hybrid financial instrument. The amended
guidance is effective for fiscal years, and interim periods within
those fiscal years, beginning after December 15, 2015, with early
adoption permitted. The effects of initially adopting the amended
guidance should be applied on a modified retrospective basis to
existing hybrid financial instruments issued in the form of a share as
of the beginning of the fiscal year for which the amendments are
effective and shall be reported as a cumulative-effect adjustment
directly to retained earnings as of the beginning of the year of
adoption. The amended guidance is not expected to have a material
impact on the Bancorp’s Consolidated Financial Statements.
Simplifying Income Statement Presentation by Eliminating the Concept of
Extraordinary Items
In January 2015, the FASB issued amended guidance that eliminates
the concept of extraordinary items from GAAP. Presently, an event
or transaction is presumed to be an ordinary and usual activity of a
reporting entity unless evidence clearly supports its classification as
an extraordinary item, which must be both unusual in nature and
infrequent in occurrence. An entity was required to segregate the
extraordinary item from the results of ordinary operations and show
the item separately in the income statement, net of tax, after income
from continuing operations. An entity was also required to disclose
applicable income taxes and either present or disclose earnings-per-
share data applicable to the extraordinary item. The presentation
and disclosure guidance for items that are unusual in nature or occur
infrequently will be retained and will be expanded to include items
that are both unusual in nature and infrequently occurring. The
amended guidance is effective for fiscal years, and interim periods
within those fiscal years, beginning after December 15, 2015, with
early adoption permitted provided that the guidance is applied from
the beginning of the fiscal year of adoption. The amended guidance
may be applied prospectively or retrospectively to all periods
presented in the financial statements. The amended guidance is not
expected to have a material impact on the Bancorp’s Consolidated
Financial Statements
Amendments to the Consolidation Analysis
In February 2015, the FASB issued amended guidance that changes
the analysis a reporting entity must perform to determine whether it
should consolidate certain types of legal entities. The amended
guidance 1) modifies the evaluation of whether limited partnerships
and similar legal entities are VIEs or voting interest entities; 2)
eliminates the presumption that a general partner should consolidate
a limited partnership; 3) affects the consolidation analysis of
reporting entities that are involved with VIEs, particularly those that
have fee arrangements and related party relationships; and 4)
provides a scope exception from consolidation guidance for
reporting entities that are required to comply with or operate in
accordance with requirements that are similar to those in Rule 2a-7
of the Investment Company Act of 1940 for registered money
market funds. The amended guidance is effective for fiscal years,
and interim periods within those years, beginning after
December 15, 2015, with early adoption permitted. The amended
guidance may be applied using either a retrospective approach or a
modified retrospective approach with a cumulative-effect
adjustment to equity as of the beginning of the fiscal year of
adoption. The Bancorp is currently in the process of evaluating the
impact of adopting the amended guidance on the Bancorp’s
Consolidated Financial Statements..