Navy Federal Credit Union 2015 Annual Report Download - page 25

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Navy Federal Credit Union6
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Navy Federal Credit Union is a member-owned, not-for-profit financial institution formed in
1933 under the provisions of the Federal Credit Union Act to provide a variety of financial services
to those individuals in its field of membership, which includes active duty and retired military
and civilian personnel who are or were employed by the Department of Defense and their
families. Navy Federal is headquartered in Vienna, VA with branch locations around the country
and abroad.
Basis of Presentation and Use of Estimates
The consolidated financial statements have been prepared in accordance with accounting
principles generally accepted in the United States of America (GAAP). The preparation of financial
statements in accordance with GAAP requires management to make estimates and assumptions
that aect the amounts reported in the consolidated financial statements and accompanying
notes. These estimates are based on information available at the time the consolidated financial
statements are prepared. Actual amounts or results could dier from these estimates.
Navy Federal evaluated subsequent events through March 24, 2016, the date these financial
statements were issued.
Principles of Consolidation
The consolidated financial statements include the accounts of Navy Federal Credit Union and
its wholly owned entity. All significant intercompany accounts and transactions are eliminated
in consolidation.
Navy Federal Financial Group (NFFG) is a credit union service organization wholly owned
by Navy Federal Credit Union that provides investment, insurance and other financial services.
Navy Federal Brokerage Services and Navy Federal Asset Management are wholly owned
subsidiaries of NFFG. Navy Federal Credit Union and its consolidated entity are referred to
as “Navy Federal” herein.
Business Combinations
The Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC)
805-10, Business Combinations, requires all business combinations be accounted for by applying
the acquisition method. Accordingly, Navy Federal recognizes assets obtained and liabilities
assumed in a business combination at fair value on the acquisition date and includes the results of
operations of the acquired entity on its Consolidated Statements of Income from the acquisition
date. Navy Federal recognizes as goodwill the excess of acquisition price over the fair value of net
assets acquired.
Cash
Cash includes cash on hand and balances due from other financial institutions including minimum
cash reserves required to be held at the Federal Reserve. Cash excludes restricted cash, which
is included in Other assets in the Consolidated Statements of Financial Condition. See Note 2:
Restrictions on Cash for details on restricted cash.