Morgan Stanley 2014 Annual Report Download - page 204

MORGAN STANLEY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Level 3 of the fair value hierarchy, respectively. During 2014, the Company recorded additional losses of
$165 million within Other revenues in the Company’s consolidated statement of income related to a non-
recurring fair value adjustment for those unfunded lending commitments.
2013.
Fair Value Measurements Using:
Carrying Value
at December 31,
2013
Quoted Prices in
Active Markets
for Identical Assets
(Level 1)
Significant
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
Gains
(Losses) for
2013(1)
(dollars in millions)
Loans(2) ........................ $1,822 $— $1,616 $206 $ (71)
Other investments(3) .............. 46 — — 46 (38)
Premises, equipment and software
costs(4) ....................... 8 — — 8 (133)
Intangible assets(3) ............... 92 — — 92 (44)
Total ........................... $1,968 $— $1,616 $352 $(286)
(1) Change in the fair value of Loans and losses related to Other investments are recorded within Other revenues, whereas losses related to
Premises, equipment and software costs and Intangible assets are recorded within Other expenses in the Company’s consolidated
statements of income.
(2) Non-recurring changes in the fair value of loans held for investment or held for sale were calculated using recently executed transactions;
market price quotations; valuation models that incorporate market observable inputs where possible, such as comparable loan or debt
prices and credit default swap spread levels adjusted for any basis difference between cash and derivative instruments; or default
recovery analysis where such transactions and quotations are unobservable.
(3) Losses related to Other investments and Intangible assets were determined primarily using discounted cash flow models.
(4) Losses related to Premises, equipment and software costs were determined primarily using discounted cash flow models or a default
recovery analysis.
There were no significant liabilities measured at fair value on a non-recurring basis during 2013.
2012.
Fair Value Measurements Using:
Carrying Value
at December 31,
2012
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
Significant
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
Gains
(Losses) for
2012(1)
(dollars in millions)
Loans(2) ........................ $1,821 $— $277 $1,544 $ (60)
Other investments(3) .............. 90 — — 90 (37)
Premises, equipment and software
costs(4) ....................... 33 — — 33 (170)
Intangible assets(3) ............... — — — — (4)
Total ........................... $1,944 $— $277 $1,667 $(271)
(1) Changes in the fair value of Loans and losses related to Other investments are recorded within Other revenues, whereas losses related to
Premises, equipment and software costs and Intangible assets are recorded within Other expenses in the Company’s consolidated
statements of income.
(2) Non-recurring changes in the fair value of loans held for investment or held for sale were calculated using recently executed transactions;
market price quotations; valuation models that incorporate market observable inputs where possible, such as comparable loan or debt
200