DOCSLIB.ORG

90 Significant Accounting Policies Cash and Cash Equivalents Cash

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
90 Significant Accounting Policies Cash and Cash Equivalents Cash Significant Accounting Policies Cash and Cash Equivalents Cash and cash equivalents includes cash and due from banks, federal funds sold and resale agreements and interest-bearing deposits at other banks. Cash paid for interest for the years ended December 31, 2008, 2007 and 2006 was $4.0 billion, $4.5 billion and $2.9 billion, respectively. Cash paid for income taxes for the years ended December 31, 2008, 2007 and 2006 was $1.2 billion, $1.5 billion and $1.5 billion, respectively. Securities Available for Sale The Company considers the nature of investments in securities in order to determine the appropriate classification and currently treat investments in debt securities as securities available for sale. These securities are stated at fair value, with the unrealized gains and losses, net of tax, reported as a component of cumulative other comprehensive income. The fair value of securities is based on quoted market prices, or if quoted market prices are not available, then the fair value is estimated using the quoted market prices for similar securities, pricing models or discounted cash flow analyses, using observable market data where available. The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization or accretion is included in interest income. Realized gains and losses on sales of securities are determined using the specific identification method. The Company evaluates its unrealized loss positions for impairment in accordance with SFAS 115, as amended by FSP No. 115-1, The Meaning of Other-Than-Temporary Impairment and its Application to Certain Investments and EITF 99-20, Recognition of Interest Income and Impairment on Purchased Beneficial Interests and Beneficial Interests That Continue to Be Held by a Transferor in Securitized Financial Assets and FSP EITF 99-20. As such, when there is other-than-temporary impairment, the Company recognizes an impairment loss in earnings equal to the entire difference between the investment’s cost and its fair value. See Note 4 for additional details. Mortgage Loans Held for Sale The Company classifies loans originated with the intent of selling in the secondary market as held for sale. Loans originated for sale are primarily sold in the secondary market as whole loans. Whole loan sales are executed with either the servicing rights being retained or released to the buyer. For sales where the loans are sold with the servicing released to the buyer, the gain or loss on the sale is equal to the difference between the proceeds received and the carrying value of the loans sold. If the loans are sold with the servicing rights retained, the gain or loss on the sale is also impacted by the fair value attributed to the servicing rights. In the third quarter of 2007, the Company shut down the mortgage origination operations of its wholesale mortgage banking unit, GreenPoint. The results of the mortgage origination operation of GreenPoint have been accounted for as discontinued operations and have been removed from the Company’s results of continuing operations for all periods presented. The results of GreenPoint’s mortgage servicing business continue to be reported as part of the Company’s continuing operations. Mortgage loans held for sale are carried at the lower of aggregate cost, net of deferred fees, deferred origination costs and effects of hedge accounting, or fair value. The fair value of mortgage loans held for sale is determined using current secondary market prices for loans with similar coupons, maturities and credit quality. The fair value of mortgage loans held for sale is impacted by changes in market interest rates. The exposure to changes in market interest rates is hedged primarily by selling forward contracts on agency securities. These derivative instruments are recorded on the balance sheet at fair value with changes in fair value being recorded in mortgage banking operations in current earnings. Also, changes in the fair value of mortgage loans held for sale are recorded as an adjustment to the loans’ carrying basis through mortgage banking operations income in current earnings. Prior to the shutdown of GreenPoint, the Company entered into commitments to originate or purchase loans whereby the interest rate of the loan was determined prior to funding (“interest rate lock commitment”). Interest rate lock commitments on mortgage loans that the Company intended to sell in the secondary market were considered freestanding derivatives. These derivatives were carried at fair value with changes in fair value reported as a component of gain on sale of the loans. As of December 31, 2008, the Company has no loan commitments due to the shutdown of the mortgage origination operations of GreenPoint. See Note 17 for additional details on mortgage banking derivatives. As of December 31, 2008 and 2007, the balance in mortgage loans held for sale was $68.5 million and $315.9 million, respectively. Loan Securitizations The Company primarily securitizes credit card loans, auto loans and installment loans. Securitization provides the Company with a significant source of liquidity and favorable regulatory capital treatment for securitizations accounted for as off-balance sheet arrangements. See Note 18 for additional detail. 90 .
Load more

Recommended publications
  • Chapter 5 Questions Multiple Choice 1
    Chapter 5 Question Review 1 Chapter 5 Questions Multiple Choice 1. At the beginning of the year, Paradise Co. had an inventory of $200,000. During the year, the company purchased goods costing $900,000. Paradise Co reported ending inventory of $300,000 at the end of the year. Their cost of goods sold is a. $1,000,000 b. $800,000 c. $1,400,000 d. $400,000 2. Under the perpetual inventory system, in addition to making the entry to record a sale, a company would a. debit Inventory and credit Cost of Goods Sold. b. debit Cost of Goods Sold and credit Purchases. c. debit Cost of Goods sold and credit Inventory. d. make no additional entry until the end of the period. 3. Gross profit equals the difference between net sales and a. operating expenses. b. cost of goods sold. c. net income. d. cost of goods sold plus operating expenses. 4. Income from operations appears on a. both a multiple-step and a single-step income statement. b. neither a multiple-step nor a single-step income statement. c. a single-step income statement. d. a multiple-step income statement. 5. The entry for a buyer to record the return of goods under a perpetual inventory system assuming the purchase was made on account would include a a. debit to inventory b. debit to purchase returns and allowances c. credit to accounts payable d. debit to accounts payable 6. Under the perpetual system, cash freight costs incurred by the buyer for the transporting of goods is recorded in which account? a.
    [Show full text]
  • CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020
    CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020 and 2019 With Independent Auditor's Report INDEPENDENT AUDITOR’S REPORT Board of Directors and Shareholders Ledyard Financial Group, Inc. and Subsidiary We have audited the accompanying consolidated financial statements of Ledyard Financial Group, Inc. and Subsidiary, which comprise the consolidated balance sheets as of December 31, 2020 and 2019, and the related consolidated statements of income, comprehensive income, changes in shareholders' equity and cash flows for the years then ended, and the related notes to the financial statements. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with U.S. generally accepted accounting principles; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with U.S. generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
    [Show full text]
  • Mark to Market Accounting: Does It Provide Information to Investors Charles Harter, Ph.D., CPA, Georgia Southern University, USA
    The Journal of Applied Business Research – November/December 2009 Volume 25, Number 6 Mark To Market Accounting: Does It Provide Information To Investors Charles Harter, Ph.D., CPA, Georgia Southern University, USA ABSTRACT According to the financial press the recent financial problems of many firms is at least partially due to mark-to-market accounting. In this paper I ask the question -- if mark-to-market accounting is the reason for the financial distress of firms, why does the FASB require mark-to- market? I review accounting standards that require mark-to-market accounting and empirically test the relation between firm value and mark to market adjustments to provide evidence as to whether mark-to-market adjustments are useful to investors and creditors. The results provide evidence that mark-to-market adjustments impact firm value. Keywords: Mark-to-market, firm value, net charge-offs INTRODUCTION he current economic crisis has seen a significant numbers of firms in financial distress. These firms have asked for bailouts from the federal government, filed for bankruptcy, or liquidated. There are numerous reasons for the financial distress of these firms. However, according to the financial press, Tthe problems encountered by firms are exacerbated by mark-to-market accounting. In this paper I ask the question -- if mark-to-market accounting is the reason for the financial distress of firms, why does the FASB require mark-to- market? I review accounting standards that require mark-to-market accounting and empirically test the relation between firm value and mark to market adjustments to provide evidence as to whether mark-to-market adjustments are useful to investors and creditors.
    [Show full text]
  • Equity Method and Joint Ventures Topic Applies to All Entities
    A Roadmap to Accounting for Equity Method Investments and Joint Ventures 2019 The FASB Accounting Standards Codification® material is copyrighted by the Financial Accounting Foundation, 401 Merritt 7, PO Box 5116, Norwalk, CT 06856-5116, and is reproduced with permission. This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte shall not be responsible for any loss sustained by any person who relies on this publication. As used in this document, “Deloitte” means Deloitte & Touche LLP, Deloitte Consulting LLP, Deloitte Tax LLP, and Deloitte Financial Advisory Services LLP, which are separate subsidiaries of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of our legal structure. Certain services may not be available to attest clients under the rules and regulations of public accounting. Copyright © 2019 Deloitte Development LLC. All rights reserved. Other Publications in Deloitte’s Roadmap Series Business Combinations Business Combinations — SEC Reporting Considerations Carve-Out Transactions Consolidation — Identifying a Controlling Financial Interest
    [Show full text]
  • Frs139-Guide.Pdf
    The KPMG Guide: FRS 139, Financial Instruments: Recognition and Measurement i Contents Introduction 1 Executive summary 2 1. Scope of FRS 139 1.1 Financial instruments outside the scope of FRS 139 3 1.2 Definitions 3 2. Classifications and their accounting treatments 2.1 Designation on initial recognition and subsequently 5 2.2 Accounting treatments applicable to each class 5 2.3 Financial instruments at “fair value through profit or loss” 5 2.4 “Held to maturity” investments 6 2.5 “Loans and receivables” 7 2.6 “Available for sale” 8 3. Other recognition and measurement issues 3.1 Initial recognition 9 3.2 Fair value 9 3.3 Impairment of financial assets 10 4. Derecognition 4.1 Derecognition of financial assets 11 4.2 Transfer of a financial asset 11 4.3 Evaluation of risks and rewards 12 4.4 Derecognition of financial liabilities 13 5. Embedded derivatives 5.1 When to separate embedded derivatives from host contracts 14 5.2 Foreign currency embedded derivatives 15 5.3 Accounting for separable embedded derivatives 16 5.4 Accounting for more than one embedded derivative 16 6. Hedge accounting 17 7. Transitional provisions 19 8. Action to be taken in the first year of adoption 20 Appendices 1: Accounting treatment required for financial instruments under their required or chosen classification 21 2: Derecognition of a financial asset 24 3: Financial Reporting Standards and accounting pronouncements 25 1 The KPMG Guide: FRS 139, Financial Instruments: Recognition and Measurement Introduction This KPMG Guide introduces the requirements of the new FRS 139, Financial Instruments: Recognition and Measurement.
    [Show full text]
  • Chapter 16 NET WORTH and OTHER EQUITY ACCOUNTS
    Chapter 16 NET WORTH AND OTHER EQUITY ACCOUNTS TABLE OF CONTENTS NET WORTH AND OTHER EQUITY ACCOUNTS .................................................... 16. 1 Examination Objectives ....................................................................................... 16-1 Associated Risks .................................................................................................. 16. 1 Overview ............................................................................................................. .1 6.2 Secondary Capital for Community Development Credit Unions ....................... 16-4 GAAP vs . RAP .................................................................................................... 16-6 Other Considerations ........................................................................................... 16-7 Capital and Solvency Evaluation ............................................................. 16.7 Undivided Earnings ............................................................................................. 16-8 Regular Reserve .................................................................................................... 6-9 Accumulated Unrealized GainsLosses on Available for Sale Securities............ 16-9 Workpapers and References................................................................................. 16-9 Chapter 16 NET WORTH AND OTHER EQUITY ACCOUNTS Examination 0 Determine whether the credit union complies with Regulation D, Objectives if applicable 0 Ascertain compliance with
    [Show full text]
  • Statutory Budget
    TOWN OF EAST FREMANTLE BUDGET FOR THE YEAR ENDED 30TH JUNE 2011 TABLE OF CONTENTS Statement of Comprehensive Income by Nature or Type 2 Statement of Comprehensive Income by Program 3 Statement of Cash Flows 4 Rate Setting Statement 5 Notes to and Forming Part of the Budget 6 to 27 TOWN OF EAST FREMANTLE STATEMENT OF COMPEREHENSIVE INCOME BY NATURE OR TYPE FOR THE YEAR ENDED 30TH JUNE 2011 NOTE 2010/11 2009/10 2009/10 Budget Actual Budget $$$ REVENUE Rates 8 5,104,693 4,780,733 4,795,777 Operating Grants, Subsidies and Contributions 779,944 765,016 837,211 Fees and Charges 11 1,076,480 1,539,872 893,327 Service Charges 10 0 0 0 Interest Earnings 2(a) 162,000 223,891 107,000 Other Revenue 108,200 248,964 166,700 7,231,317 7,558,476 6,800,015 EXPENSES Employee Costs (2,695,372) (1,996,865) (2,220,359) Materials and Contracts (3,275,369) (2,990,202) (3,075,660) Utility Charges (190,500) (265,214) (275,031) Depreciation 2(a) (702,205) (704,033) (670,670) Interest Expenses 2(a) (35,827) (45,006) (45,603) Insurance Expenses (201,180) (196,218) (184,700) Other Expenditure (99,900) (137,391) (99,500) (7,200,353) (6,334,929) (6,571,523) Non-Operating Grants, Subsidies and Contributions 787,922 251,240 424,862 Profit on Asset Disposals 4 46,000 16,330 40,170 Loss on Asset Disposals 4 (1,470) 0 NET RESULT 863,416 1,491,117 693,524 Other Comprehensive Income 000 TOTAL COMPREHENSIVE INCOME 863,416 1,491,117 693,524 Please note, Other Comprehensive Income (if any) is impacted upon by external forces and is not able to be reliably estimated.
    [Show full text]
  • Budget 2011/2012
    SHIRE OF WILLIAMS BUDGET FOR THE YEAR ENDED 30TH JUNE 2012 TABLE OF CONTENTS Statement of Comprehensive Income by Nature or Type 1 Statement of Comprehensive Income by Program 2 Statement of Cash Flows 3 Rate Setting Statement 4 Notes to and Forming Part of the Budget 5 to 29 Supplementary Information 30 to 31 Schedules 3 - 14 32 to 82 Salaries & Wages Schedule 83 SHIRE OF WILLIAMS STATEMENT OF COMPREHENSIVE INCOME BY NATURE OR TYPE FOR THE YEAR ENDED 30TH JUNE 2012 NOTE 2011/12 2010/11 2010/11 Budget Actual Budget $ $ $ REVENUE Rates 8 1,294,720 1,243,082 1,243,898 Operating Grants, Subsidies and Contributions 468,900 894,236 448,755 Fees and Charges 11 429,150 588,966 368,220 Service Charges 10 0 0 0 Interest Earnings 2(a) 74,800 72,431 74,100 Other Revenue 0 10,653 2,000 2,267,570 2,809,368 2,136,973 EXPENSES Employee Costs -1,060,956 -1,108,379 -960,100 Materials and Contracts -564,588 -742,106 -625,143 Utility Charges -165,000 -165,743 -140,000 Depreciation 2(a) -571,700 -571,611 -557,480 Interest Expenses 2(a) -24,536 -12,553 -12,375 Insurance Expenses -112,000 -111,439 -100,500 Other Expenditure -22,000 -25,408 -9,500 -2,520,780 -2,737,239 -2,405,098 -253,210 72,129 -268,125 Non-Operating Grants, Subsidies and Contributions 1,523,100 1,300,127 1,263,100 Profit on Asset Disposals 4 0 122 0 Loss on Asset Disposals 4 -52,220 -10,294 -5,140 NET RESULT 1,217,670 1,362,084 989,835 Other Comprehensive Income 0 0 0 TOTAL COMPREHENSIVE INCOME 1,217,670 1,362,084 989,835 Please note, Other Comprehensive Income (if any) is impacted upon by external forces and is not able to be reliably estimated.
    [Show full text]
  • When Available, the Fair Value of Securities Is Based on Quoted Prices in Active Markets
    Investments (Trading Securities and Available-for-Sale Securities) When available, the fair value of securities is based on quoted prices in active markets. If quoted prices are not available, fair values are obtained from nationally-recognized pricing services, broker quotes, or other model-based valuation techniques. Level 1 securities include U.S. Treasuries and seed money in funds traded in active markets. Level 2 securities primarily include agency mortgage backed securities, commercial mortgage backed securities, asset backed securities, municipal and corporate bonds, U.S. and foreign government and agency securities, and seed money and other investments in certain hedge funds. The fair value of these Level 2 securities is based on a market approach with prices obtained from nationally-recognized pricing services. Observable inputs used to value these securities can include: reported trades, benchmark yields, issuer spreads and broker/dealer quotes. Level 3 securities primarily include non-agency residential mortgage backed securities, asset backed securities and corporate bonds. The fair value of these Level 3 securities is typically based on a single broker quote, except for the valuation of non-agency residential mortgage backed securities. Effective March 31, 2010, the Company returned to using prices from nationally-recognized pricing services to determine the fair value of non-agency residential mortgage backed securities because the difference between these prices and the results of the Company’s discounted cash flows was not significant. The Company continues to classify its non-agency residential mortgage backed securities as Level 3 because it believes the market for these securities is still inactive and their valuation includes significant unobservable inputs.
    [Show full text]
  • 2018 Audited Financial Statements
    REPORT OF INDEPENDENT AUDITORS AND FINANCIAL STATEMENTS WASHINGTON BUSINESS BANK December 31, 2018 and 2017 Table of Contents PAGE Report of Independent Auditors 1 Financial Statements Statements of financial condition 2 Statements of income 3 Statements of comprehensive income 4 Statements of changes in shareholders’ equity 5 Statements of cash flows 6 Notes to financial statements 7–30 Report of Independent Auditors Board of Directors Washington Business Bank Report on the Financial Statements We have audited the accompanying financial statements of Washington Business Bank, which comprise the statements of financial condition as of December 31, 2018 and 2017, and the related statements of income, comprehensive income, changes in shareholders’ equity, and cash flows for the years then ended, and the related notes to the financial statements. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.
    [Show full text]
  • B&HB 2020 Audited Financial Statements
    2020 Audited Financial Statements CONTENTS FINANCIAL STATEMENTS Balance sheets 1 Statements of income 2 Statements of comprehensive income 3 Statements of stockholders’ equity 4 Statements of cash flows 5 - 6 Notes to financial statements 7 - 53 INDEPENDENT AUDITOR’S REPORT 54 BURKE & HERBERT BANK & TRUST COMPANY BALANCE SHEETS December 31, 2020 and 2019 In thousands, except share and per share data ASSETS 2020 2019 Cash and due from banks $ 228,704 $ 83,747 Securities available for sale, at fair value 1,159,701 693,750 Restricted stock, at cost 12,192 5,944 Loans held for sale, at fair value 8,211 1,969 Loans, net of allowance for loan losses of $32,697 in 2020 and $24,201 in 2019 1,801,078 1,859,001 Bank premises and equipment, net 40,494 41,188 Accrued interest receivable 13,784 8,113 Bank owned life insurance 88,977 86,667 Other assets 79,503 85,560 $ 3,432,644 $ 2,865,939 LIABILITIES AND STOCKHOLDERS’ EQUITY Liabilities Deposits: Demand deposits $ 852,008 $ 621,424 Interest checking accounts 538,289 386,617 Savings deposits and money market accounts 1,050,929 975,358 Time deposits 346,741 410,613 2,787,967 2,394,012 Other borrowed funds 225,000 75,000 Accrued interest and other liabilities 34,800 43,399 3,047,767 2,512,411 Stockholders’ Equity Common stock, $20 par value; 200,000 shares authorized; outstanding 186,202 in 2020 and 186,958 in 2019 3,724 3,739 Additional paid-in capital 10,178 10,032 Retained earnings 348,395 338,331 Accumulated other comprehensive income 22,580 1,426 384,877 353,528 $ 3,432,644 $ 2,865,939 See Notes
    [Show full text]
  • A Roadmap to the Preparation of the Statement of Cash Flows
    A Roadmap to the Preparation of the Statement of Cash Flows May 2020 The FASB Accounting Standards Codification® material is copyrighted by the Financial Accounting Foundation, 401 Merritt 7, PO Box 5116, Norwalk, CT 06856-5116, and is reproduced with permission. This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte shall not be responsible for any loss sustained by any person who relies on this publication. The services described herein are illustrative in nature and are intended to demonstrate our experience and capabilities in these areas; however, due to independence restrictions that may apply to audit clients (including affiliates) of Deloitte & Touche LLP, we may be unable to provide certain services based on individual facts and circumstances. As used in this document, “Deloitte” means Deloitte & Touche LLP, Deloitte Consulting LLP, Deloitte Tax LLP, and Deloitte Financial Advisory Services LLP, which are separate subsidiaries of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of our legal structure. Copyright © 2020 Deloitte Development LLC. All rights reserved. Publications in Deloitte’s Roadmap Series Business Combinations Business Combinations — SEC Reporting Considerations Carve-Out Transactions Comparing IFRS Standards and U.S.
    [Show full text]