2K Sports 2009 Annual Report Download - page 46

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At each period end, it is necessary for us to make certain estimates and assumptions to compute the
provision for income taxes including allocations of certain transactions to different tax jurisdictions,
amounts of permanent and temporary differences, the likelihood of deferred tax assets being recovered
and the outcome of contingent tax risks. These estimates and assumptions are revised as new events occur,
more experience is acquired and additional information is obtained. The impact of these revisions is
recorded in income tax expense or benefit in the period in which they become known.
Recently Issued Accounting Pronouncements
Fair Value Measurements
In November 2008, the Company adopted the guidance as it pertains to the accounting for financial assets
and liabilities as well as other assets and liabilities carried at fair value on a recurring basis. The adoption
of this guidance did not affect the Company’s historical consolidated financial statements. For more
information, see Note 3 to the Consolidated Financial Statements included in Item 8. On November 1,
2009 the Company adopted the guidance related to fair value measurements pertaining to non-financial
assets and liabilities on a prospective basis. This guidance established the authoritative definition of fair
value, set out a framework for measuring fair value and expanded the required disclosures about fair value
measurement. We have evaluated the non-financial assets and liabilities portion of the guidance and expect
that it will have no significant impact on our consolidated financial position or results of operations.
Research and Development
In November 2008, the Company adopted the guidance related to accounting for the non-refundable
portion of a payment made by a research and development entity for future research and development
activities. Under this guidance an entity is required to defer and capitalize non-refundable advance
payments made for research and development activities until the related goods are delivered or the related
services are performed. The adoption did not have a material effect on our consolidated financial position,
cash flows or results of operations.
Business Combinations
In December 2007, new guidance was issued providing greater consistency in the accounting and financial
reporting of business combinations. It requires the acquiring entity in a business combination to recognize
all assets acquired and liabilities assumed in the transaction, establishes the acquisition-date fair value as
the measurement objective for all assets acquired and liabilities assumed, and requires the acquirer to
disclose the nature and financial effect of the business combination. The guidance is effective for all fiscal
years beginning after December 15, 2008 (November 1, 2009 for the Company) and interim periods within
those years, with earlier adoption prohibited. We do not expect that the adoption of this guidance will have
an material impact on our historical consolidated financial position, cash flows and results of operations.
In April 2009, additional guidance was issued which requires that assets acquired and liabilities assumed in
a business combination that arise from contingencies be recognized at fair value, if fair value can be
determined during the measurement period. This guidance specifies that an asset or liability should be
recognized at time of acquisition if the amount of the asset or liability can be reasonably estimated and that
it is probable that an asset existed or that a liability had been incurred at the acquisition date. This
guidance is effective for all fiscal years beginning after December 15, 2008 (November 1, 2009 for the
Company).
Intangibles—Goodwill and Other
In April 2008, new guidance was issued for determining the useful life of a recognized intangible asset
which applies prospectively to intangible assets acquired individually or with a group of other assets in
either an asset acquisition or business combination. This guidance is effective for fiscal years, and interim
41