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Revenue Recognition - Fasb

In: Business and Management

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Ameriprise Financial, Inc.
802 Ameriprise Financial Center
Minneapolis, MN 55474
Via Email: director@fasb.org
October 22, 2010
Technical Director
File Reference No. 1820‐100
Financial Accounting Standards Board
401 Merritt 7
Post Office Box 5116
Norwalk, Connecticut 06856‐5116
Re: File Reference: No. 1820‐100, Revenue Recognition (Topic 605) – Revenue from Contracts with Customers
Dear Technical Director:
Ameriprise Financial, Inc., one of the nation’s leading financial planning, asset management and insurance companies, appreciates the opportunity to offer comments with respect to the
Proposed Accounting Standards Update, Revenue Recognition (Topic 605) – Revenue from
Contracts with Customers (the “Proposed Statement”).
We support the FASB’s efforts to develop a single revenue recognition model across industries.
We also support the FASB’s efforts to achieve greater convergence with the IASB. However, we believe the issuance of the Proposed Statement as written may create inconsistencies and add complexity to revenue recognition for contracts that charge a fixed rate fee on assets under management (AUM).
We believe the timing of revenue recognition for certain nonrefundable fixed rate fee contracts may become disconnected from the cash flows and corresponding economics of our transactions. We enter into various types of contracts to perform services for a fixed rate fee.
The revenues for fixed rate fee contracts are based on a fixed percentage of assets under management which varies based on market movements and net subscriptions or redemptions.
For example, revenue from mutual fund fixed rate fee contracts is generally accrued daily and collected monthly over the contract period.
It is industry practice to recognize these fixed rate fees for asset management contracts as earned over the service period as the fees are nonrefundable. We

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