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TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1. Basis of Presentation and Summary of Significant Accounting Policies (Continued)
TPE if VSOE is not available, or estimated selling price if neither VSOE nor TPE is available. The
guidance requires arrangements under which multiple revenue generating activities to be performed be
allocated at inception. The residual method under the existing accounting guidance has been
eliminated. The guidance became effective for Tyco for revenue arrangements entered into or
materially modified beginning in the first quarter of fiscal 2011. The adoption of the guidance did not
have a material impact on the Company’s financial position, results of operations or cash flows.
In June 2009, the FASB issued authoritative guidance which amended the existing guidance for the
consolidation of VIEs, 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 VIE with an approach focused on identifying which
enterprise has the power to direct the significant activities of a VIE, and the obligation to absorb losses
or the right to receive benefits that may be significant to the VIE. The guidance became effective for
Tyco in the first quarter of fiscal 2011. The Company’s population of VIE’s is primarily composed of
joint ventures that are not material to the Company’s consolidated operations, financial position, results
of operations or cash flows. The adoption of this guidance resulted in the deconsolidation of a joint
venture in the Tyco Fire Protection segment, but it did not have a material impact on the Company’s
financial position, results of operations or cash flows.
Recently Issued Accounting Pronouncements—In June 2011, the FASB issued authoritative guidance
for the presentation of comprehensive income. The guidance amended the reporting of Other
Comprehensive Income (‘‘OCI’’) by eliminating the option to present OCI as part of the Statement of
Changes in Shareholder’s Equity. The amendment will not impact the accounting for OCI, but only its
presentation in the Company’s Consolidated Financial Statements. The guidance requires that items of
net income and OCI be presented either in a single continuous statement of comprehensive income or
in two separate but consecutive statements which include total net income and its components,
consecutively followed by total OCI and its components to arrive at total comprehensive income. The
guidance must be applied retrospectively and is effective for Tyco in the first quarter of fiscal 2013, with
early adoption permitted. The Company is currently assessing the timing of its adoption of the
guidance.
In September 2011, the FASB issued authoritative guidance which expanded and enhanced the
existing disclosures related to multi-employer pension and other postretirement benefit plans. The
amendments require additional quantitative and qualitative disclosures to provide more detailed
information including, the significant multi-employer plans in which the Company participates, level of
the Company’s participation and contributions, financial health and indication of funded status which
will provide users of financial statements with a better understanding of the employer’s involvement in
multi-employer benefit plans. The guidance must be applied retrospectively and is effective for Tyco for
the fiscal 2012 annual period, with early adoption permitted. The Company is currently assessing the
timing of its adoption of the guidance along with what impact, if any, the guidance will have on its
annual disclosures.
In September 2011, the FASB issued authoritative guidance which amends the process of testing
goodwill for impairment. The guidance permits an entity to first assess qualitative factors to determine
whether the existence of events or circumstances leads to a determination that it is more likely than
not, defined as having a likelihood of more than fifty percent, that the fair value of a reporting unit is
less than its carrying amount. If an entity determines it is not more likely than not that the fair value of
92 2011 Financials