American Express 2011 Annual Report Download - page 63

AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
leases is recognized ratably over the lease term, and includes
adjustments for rent concessions, rent escalations and leasehold
improvement allowances. The Company accounts for lease
restoration obligations in accordance with applicable GAAP,
which requires recognition of the fair value of restoration
liabilities when incurred, and amortization of restoration assets
over the lease term.
The Company capitalizes certain costs associated with the
acquisition or development of internal-use software. Once the
software is ready for its intended use, these costs are amortized
on a straight-line basis over the software’s estimated useful life,
generally 5 years.
OTHER SIGNIFICANT ACCOUNTING POLICIES
The following table identifies the Company’s other significant accounting policies, the Note and page where the Note can be found.
Significant Accounting Policy
Note
Number Note Title Page
Fair Value Measurements Note 3 Fair Values Page 63
Accounts Receivable Note 4 Accounts Receivable and Loans Page 65
Loans Note 4 Accounts Receivable and Loans Page 65
Reserves for Losses Note 5 Reserves for Losses Page 70
Investment Securities Note 6 Investment Securities Page 72
Asset Securitizations Note 7 Asset Securitizations Page 74
Goodwill and Other Intangible Assets Note 8 Other Assets Page 75
Membership Rewards Note 11 Other Liabilities Page 80
Derivative Financial Instruments and Hedging Activities Note 12 Derivatives and Hedging Activities Page 80
Income Taxes Note 17 Income Taxes Page 88
Stock-based Compensation Note 20 Stock Plans Page 91
Retirement Plans Note 21 Retirement Plans Page 93
Regulatory Matters and Capital Adequacy Note 23 Regulatory Matters and Capital Adequacy Page 98
Legal Contingencies Note 24 Commitments and Contingencies Page 100
Reportable Operating Segments Note 25 Reportable Operating Segments and Geographic Operations Page 101
RECENTLY ISSUED ACCOUNTING STANDARDS
The Financial Accounting Standards Board recently issued
Accounting Standards Update (ASU) No. 2011-05,
Comprehensive Income (Topic 220): Presentation of
Comprehensive Income. This standard requires entities to report
components of comprehensive income in either a continuous
statement of comprehensive income or two separate but
consecutive statements. This standard will not impact the
Company’s financial position or results of operations. The
Company will begin reporting components of other
comprehensive income in a separate statement following the
Consolidated Statement of Income beginning in the quarter
ending March 31, 2012.
CLASSIFICATION OF VARIOUS ITEMS
Beginning the first quarter of 2011, certain payments to business
partners previously expensed in other, net expense were
reclassified as contra-revenue within total non-interest revenues
or as marketing and promotion expense. These partner payments
are primarily related to certain co-brand contracts where upfront
payments are amortized over the life of the contract. In addition,
in the first quarter of 2011, the Company reclassified $353
million, reducing both cash and cash due from banks, and other
liabilities, on the December 31, 2010 Consolidated Balance Sheet
from amounts previously reported to correct for the effect of a
misclassification. Amounts in prior periods for these items have
been reclassified to conform to the current presentation and are
insignificant to the affected line items.
Certain other reclassifications of prior period amounts have
been made to conform to the current presentation. These other
reclassifications did not have an impact on the Company’s
financial position or results of operations.
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