The Hartford 2008 Annual Report Download - page 350

Table of Contents
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
1. Basis of Presentation and Accounting Policies (continued)
Business Combinations
In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS 141(R)”). This
statement replaces SFAS No. 141, “Business Combinations” (“SFAS 141”) and establishes the principles and requirements
for how the acquirer in a business combination: (a) measures and recognizes the identifiable assets acquired, liabilities
assumed, and any noncontrolling interests in the acquired entity, (b) measures and recognizes positive goodwill acquired or
a gain from bargain purchase (negative goodwill), and (c) determines the disclosure information that is decision-useful to
users of financial statements in evaluating the nature and financial effects of the business combination. Some of the
significant changes to the existing accounting guidance on business combinations made by SFAS 141(R) include the
following:
• Most of the identifiable assets acquired, liabilities assumed and any noncontrolling interest in the acquiree shall be
measured at their acquisition-date fair values in accordance with SFAS 157 fair value rather than SFAS 141’s
requirement based on estimated fair values;
• Acquisition-related costs incurred by the acquirer shall be expensed in the periods in which the costs are incurred rather
than included in the cost of the acquired entity;
• Goodwill shall be measured as the excess of the consideration transferred, including the fair value of any contingent
consideration, plus the fair value of any noncontrolling interest in the acquiree, over the fair values of the acquired
identifiable net assets, rather than measured as the excess of the cost of the acquired entity over the estimated fair
values of the acquired identifiable net assets;
• Contractual pre-acquisition contingencies are to be recognized at their acquisition date fair values and noncontractual
pre-acquisition contingencies are to be recognized at their acquisition date fair values only if it is more likely than not
that the contingency gives rise to an asset or liability, whereas SFAS 141 generally permits the deferred recognition of
pre-acquisition contingencies until the recognition criteria of SFAS No. 5, “Accounting for Contingencies” are met; and
• Contingent consideration shall be recognized at the acquisition date rather than when the contingency is resolved and
consideration is issued or becomes issuable.
SFAS 141(R) is effective for and shall be applied prospectively to business combinations for which the acquisition date is on
or after the beginning of the first annual reporting period beginning on or after December 15, 2008, with earlier adoption
prohibited. Assets and liabilities that arose from business combinations with acquisition dates prior to the SFAS 141(R)
effective date shall not be adjusted upon adoption of SFAS 141(R) with certain exceptions for acquired deferred tax assets
and acquired income tax positions. The adoption of SFAS 141(R) on January 1, 2009, did not have a material effect on the
Company’s consolidated financial statements.
Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51
In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements”
(“SFAS 160”). This statement amends Accounting Research Bulletin No. 51, “Consolidated Financial Statements” (“ARB
51”). Noncontrolling interest refers to the minority interest portion of the equity of a subsidiary that is not attributable
directly or indirectly to a parent. SFAS 160 establishes accounting and reporting standards that require for-profit entities that
prepare consolidated financial statements to: (a) present noncontrolling interests as a component of equity, separate from the
parent’s equity, (b) separately present the amount of consolidated net income attributable to noncontrolling interests in the
income statement, (c) consistently account for changes in a parent’s ownership interests in a subsidiary in which the parent
entity has a controlling financial interest as equity transactions, (d) require an entity to measure at fair value its remaining
interest in a subsidiary that is deconsolidated, and (e) require an entity to provide sufficient disclosures that identify and
clearly distinguish between interests of the parent and interests of noncontrolling owners. SFAS 160 applies to all for-profit
entities that prepare consolidated financial statements, and affects those for-profit entities that have outstanding
noncontrolling interests in one or more subsidiaries or that deconsolidate a subsidiary. SFAS 160 is effective for fiscal years,
and interim periods within those fiscal years, beginning on or after December 15, 2008 with earlier adoption prohibited. The
Company’s adoption of SFAS 160 on January 1, 2009 did not have a material effect on the Company’s consolidated
financial statements.
F-12
Source: HARTFORD FINANCIAL S, 10-K, February 12, 2009