ADT 2009 Annual Report Download - page 190

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation and Summary of Significant Accounting Policies (Continued)
early adoption permitted. The guidance applies on a prospective basis unless the Company specifically
elects to apply the guidance retrospectively. The Company is currently assessing what impact, if any, the
guidance will have on its financial position, results of operations or cash flows, as well as the timing of
its adoption of the guidance.
In June 2009, the FASB issued authoritative guidance which amended the existing guidance for the
consolidation of variable interest entities, to address the elimination of the concept of a qualifying
special purpose entity. The guidance also replaces the quantitative-based risks and rewards calculation
for determining which enterprise has a controlling financial interest in a variable interest entity with an
approach focused on identifying which enterprise has the power to direct the activities of a variable
interest entity, and the obligation to absorb losses of the entity or the right to receive benefits from the
entity. Additionally, the guidance requires any enterprise that holds a variable interest in a variable
interest entity to provide enhanced disclosures that will provide users of financial statements with more
transparent information about an enterprise’s involvement in a variable interest entity. The guidance is
effective for Tyco in the first quarter of fiscal 2011. The Company is currently assessing what impact, if
any, that the guidance will have on its financial position, results of operations or cash flows.
In December 2008, the FASB issued authoritative guidance for employers’ disclosures about
postretirement benefit plan assets. The guidance requires additional disclosures about plan assets
related to an employer’s defined benefit pension or other post-retirement plans to enable investors to
better understand how investment decisions are made, the major categories of plan assets, the inputs
and valuation techniques used to measure the fair value of plan assets, the effect of fair value
measurements using significant unobservable inputs (Level 3) on changes in plan assets for the period,
and the significant concentrations of risk within plan assets. The disclosure provisions of the guidance
are effective for Tyco in the first quarter of fiscal 2010.
In June 2008, the FASB ratified authoritative guidance for determining whether instruments
granted in share-based payment transactions are participating securities. The guidance addresses
whether instruments granted in share-based payment awards are participating securities prior to vesting
and, therefore, must be included in the earnings allocation in calculating earnings per share under the
two-class method. The guidance requires that unvested share-based payment awards that contain
non-forfeitable rights to dividends or dividend-equivalents be treated as participating securities in
calculating earnings per share. The guidance is effective for Tyco starting with the first quarter of fiscal
2010, and shall be applied retrospectively to all prior periods. The Company believes that the guidance
will not have a material impact on its financial position, results of operations or cash flows.
In April 2008, the FASB issued authoritative guidance for determining the useful life of intangible
assets. The guidance amends the factors that should be considered in developing renewal or extension
assumptions used to determine the useful life of a recognized intangible asset. The guidance is effective
for Tyco in the first quarter of fiscal 2010. The Company has determined that the guidance will not
have a material impact on its financial position, results of operations or cash flows.
In December 2007, the FASB revised the authoritative guidance for business combinations. The
revised guidance retains the underlying concepts of the existing guidance in that business combinations
are still accounted for at fair value. However, the accounting for certain other aspects of business
combinations will be affected. Acquisition costs will generally be expensed as incurred. Restructuring
costs associated with a business combination will generally be expensed subsequent to the acquisition
date. In-process research and development will be recorded at fair value as an indefinite-lived
98 2009 Financials