Wells Fargo 2013 Annual Report Download - page 116

Current Accounting Developments
The following accounting pronouncements have been issued by
the FASB but are not yet effective:
x
x
x
x
Accounting Standards Update (ASU or Update) 2014-04,
Receivables – Troubled Debt Restructurings by Creditors
(Subtopic 310-40) – Reclassification of Residential Real
Estate Collateralized Consumer Mortgage Loans upon
Foreclosure
ASU 2014-01, Investments – Equity Method and Joint
Ventures (Topic 323): Accounting for Investments in
Qualified Affordable Housing Projects
ASU 2013-11, Income Taxes (Topic 740): Presentation of an
Unrecognized Tax Benefit When a Net Operating Loss
Carryforward, a Similar Tax Loss, or a Tax Credit
Carryforward Exists; and
ASU 2013-08, Financial Services – Investment Companies
(Topic 946): Amendments to the Scope, Measurement and
Disclosure Requirements.
ASU 2014-04 clarifies the timing of when a creditor is
considered to have taken physical possession of residential real
estate collateral for a consumer mortgage loan, resulting in the
reclassification of the loan receivable to real estate owned. A
creditor has taken physical possession of the property when
either (1) the creditor obtains legal title through foreclosure, or
(2) the borrower transfers all interests in the property to the
creditor via a deed in lieu of foreclosure or a similar legal
agreement. The Update also requires disclosure of the amount of
foreclosed residential real estate property held by the creditor
and the recorded investment in residential real estate mortgage
loans that are in process of foreclosure. These changes are
effective for us in first quarter 2015 with prospective application.
Early adoption is permitted. Our adoption of this guidance will
not have a material effect on our consolidated financial
statements.
ASU 2014-01 amends the criteria a company must meet to elect
to account for investments in qualified affordable housing
projects using a method other than the cost or equity methods. If
the criteria are met, a company is permitted to amortize the
initial investment cost in proportion to and over the same period
as the total tax benefits the company expects to receive. The
amortization of the initial investment cost and tax benefits are to
be recorded in the income tax expense line. The Update also
requires new disclosures about all investments in qualified
affordable housing projects regardless of the accounting method
used. These changes are effective for us in first quarter 2015 with
retrospective application. Early adoption is permitted. We are
evaluating the impact this Update will have on our consolidated
financial statements.
ASU 2013-11 is expected to eliminate diversity in practice as it
provides guidance on financial statement presentation of an
unrecognized tax benefit when a net operating loss (NOL)
carryforward, a similar tax loss, or a tax credit carryforward
exists. These changes are effective for us in first quarter 2014
with prospective application applied to all unrecognized tax
benefits that exist at the effective date. Early adoption and
retrospective application are permitted. This Update will not
have a material effect on our consolidated financial statements.
ASU 2013-08 amends the scope, measurement and disclosure
requirements for investment companies. The Update changes
criteria companies use to assess whether an entity is an
investment company. In addition, investment companies must
measure noncontrolling ownership interests in other investment
companies at fair value rather than using the equity method of
accounting. This Update also requires new disclosures, including
information about changes, if any, in an entity’s status as an
investment company and information about financial support
provided or contractually required to be provided by an
investment company to any of its investees. These changes are
effective for us in first quarter 2014 with prospective application.
Early adoption is not permitted. The Update will not have a
material effect on our consolidated financial statements.
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