ADT 2010 Annual Report Download - page 176

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation and Summary of Significant Accounting Policies (Continued)
did not have a material impact on the Company’s historical annual or quarterly basic and diluted
earnings per share. See Note 7 for additional information related to the adoption of the guidance.
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
intangible at the acquisition date until it is completed or abandoned and its useful life can be
determined. Changes in deferred tax asset valuation allowances and uncertain tax positions after the
acquisition date will generally impact income tax expense. The revised guidance also expands required
disclosures surrounding the nature and financial effects of business combinations. The revised guidance
was adopted by the Company in the first quarter of fiscal 2010, which did not have a material impact
on the Company’s financial position, results of operations or cash flows. The revised guidance is
primarily effective for all business combinations beginning in the first quarter of fiscal 2010 and
thereafter, including the acquisition of Broadview Security. See Note 4.
In December 2007, the FASB issued authoritative guidance for noncontrolling interests in
consolidated financial statements. The guidance requires the recognition of a noncontrolling interest
(minority interest prior to the adoption of the guidance) as equity in the Consolidated Financial
Statements. The amount of net income attributable to the noncontrolling interest should be included in
consolidated net income on the face of the Consolidated Statements of Operations. The guidance also
amends certain existing consolidation procedures in order to achieve consistency with the requirements
of the revised authoritative guidance for business combinations discussed above. The guidance also
includes expanded disclosure requirements regarding the interests of the parent and its noncontrolling
interest. The guidance was adopted by Tyco in the first quarter of fiscal 2010 and was applied
retrospectively. The adoption did not have a material impact on the Company’s financial position,
results of operations or cash flows.
In September 2006, the FASB issued authoritative guidance for fair value measurements, which
enhances existing guidance for measuring assets and liabilities at fair value. The guidance defines fair
value, establishes a framework for measuring fair value and expands disclosure about fair value
measurements. The guidance was adopted in two phases. Tyco adopted the fair value provisions relating
to financial assets and liabilities in the first quarter of 2009 and for nonfinancial assets and liabilities in
the first quarter of fiscal 2010. The adoption did not have a material impact on the Company’s
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 became
effective for Tyco in the first quarter of fiscal 2010. The adoption did not have a material impact on the
Company’s financial position, results of operations or cash flows.
Recently Issued Accounting Pronouncements—In September 2009, the FASB issued authoritative
guidance for the accounting for revenue arrangements with multiple deliverables. The guidance
establishes a selling price hierarchy for determining the selling price of a deliverable. The selling price
used for each deliverable will be based on vendor-specific objective evidence if available, third-party
88 2010 Financials