Alcoa 2010 Annual Report Download - page 97

Effective January 1, 2010, Alcoa adopted changes issued by the FASB on February 24, 2010 to accounting for and
disclosure of events that occur after the balance sheet date but before financial statements are issued or available to be
issued, otherwise known as “subsequent events.” Specifically, these changes clarify that an entity that is required to file
or furnish its financial statements with the SEC is not required to disclose the date through which subsequent events
have been evaluated (see directly below). Other than the elimination of disclosing the date through which management
has performed its evaluation for subsequent events (see Note Y), the adoption of these changes had no impact on the
Consolidated Financial Statements.
On June 30, 2009, Alcoa adopted changes issued by the FASB to accounting for and disclosure of events that occur
after the balance sheet date but before financial statements are issued or are available to be issued, otherwise known as
“subsequent events.” Specifically, these changes set forth the period after the balance sheet date during which
management of a reporting entity should evaluate events or transactions that may occur for potential recognition or
disclosure in the financial statements, the circumstances under which an entity should recognize events or transactions
occurring after the balance sheet date in its financial statements, and the disclosures that an entity should make about
events or transactions that occurred after the balance sheet date (see directly above). The adoption of these changes had
no impact on the Consolidated Financial Statements as management already followed a similar approach prior to the
adoption of this new guidance (see Note Y).
On January 1, 2009, Alcoa adopted changes issued by the FASB to accounting for intangible assets. These changes
amend the factors that should be considered in developing renewal or extension assumptions used to determine the
useful life of a recognized intangible asset in order to improve the consistency between the useful life of a recognized
intangible asset outside of a business combination and the period of expected cash flows used to measure the fair value
of an intangible asset in a business combination. The adoption of these changes had no impact on the Consolidated
Financial Statements.
On January 1, 2009, Alcoa adopted changes issued by the FASB to the calculation of earnings per share. These changes
state that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents
(whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share
pursuant to the two-class method for all periods presented (see Note S). The adoption of these changes resulted in a
reduction of $0.01 for both basic and diluted earnings per share on income from continuing operations attributable to
Alcoa common shareholders and net loss attributable to Alcoa common shareholders for the year ended December 31,
2008.
Recently Issued Accounting Guidance. In December 2010, the FASB issued changes to the disclosure of pro forma
information for business combinations. These changes clarify that if a public entity presents comparative financial
statements, the entity should disclose revenue and earnings of the combined entity as though the business combination
that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period
only. Also, the existing supplemental pro forma disclosures were expanded to include a description of the nature and
amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in
the reported pro forma revenue and earnings. These changes become effective for Alcoa beginning January 1, 2011.
Upon adoption, management has determined these changes will not have an impact on the Consolidated Financial
Statements.
In December 2010, the FASB issued changes to the testing of goodwill for impairment. These changes require an entity
to perform all steps in the test for a reporting unit whose carrying value is zero or negative if it is more likely than not
(more than 50%) that a goodwill impairment exists based on qualitative factors, resulting in the elimination of an
entity’s ability to assert that such a reporting unit’s goodwill is not impaired and additional testing is not necessary
despite the existence of qualitative factors that indicate otherwise. These changes become effective for Alcoa beginning
January 1, 2011. Based on the most recent impairment review of Alcoa’s goodwill (2010 fourth quarter), management
has determined these changes will not have an impact on the Consolidated Financial Statements upon adoption.
In January 2010, the FASB issued changes to disclosure requirements for fair value measurements. Specifically, the
changes require a reporting entity to disclose, in the reconciliation of fair value measurements using significant
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