Baker Hughes 2009 Annual Report Download - page 118

44 Baker Hughes Incorporated
New Accounting Standards and Accounting
Standards Updates
In June 2009, the FASB issued ASC 105, Generally Accepted
Accounting Principles. The ASC identifies itself as the source
of authoritative accounting principles recognized by the FASB
to be applied by nongovernmental entities in the preparation
of financial statements in conformity with generally accepted
accounting principles in the United States. Rules and interpre-
tive releases of the SEC under authority of federal securities
laws are also sources of authoritative GAAP. The ASC does
not change GAAP, but is intended to simplify user access to all
authoritative GAAP by providing all the authoritative literature
related to a particular topic in one place. This statement is
effective for financial statements issued for interim and annual
periods ending after September 15, 2009. We have included
references to authoritative accounting literature in accordance
with the Codification. There are no other changes to the con-
tent of the Company’s financial statements or disclosures as a
result of the adoption.
In October 2009, the FASB issued an update to ASC 605,
Revenue Recognition – Multiple Deliverable Revenue Arrange-
ments. This ASU addresses accounting for multiple-deliverable
arrangements to enable vendors to account for deliverables
separately. The provision establishes a selling price hierarchy
for determining the selling price of a deliverable. This update
requires expanded disclosures for multiple deliverable revenue
arrangements. The ASU will be effective for revenue arrange-
ments entered into or materially modified beginning on or
after June 15, 2010. We have not determined the impact,
if any, on our consolidated financial statements.
In September 2006, FASB issued ASC 820, Fair Value
Measurements and Disclosures, which is intended to increase
consistency and comparability in fair value measurements by
defining fair value, establishing a framework for measuring
fair value and expanding disclosures about fair value measure-
ments. On January 1, 2008, we adopted the provisions of this
ASC related to financial assets and liabilities and to nonfinancial
assets and liabilities measured at fair value on a recurring basis
and on January 1, 2009, we adopted the provisions related to
nonfinancial assets and liabilities that are not required or per-
mitted to be measured at fair value on a recurring basis. There
was no material impact to our consolidated financial statements
related to these adoptions. Additionally, in April 2009, the
FASB issued the following three accounting standards updates:
(i) ASC 820, Determining Fair Value When the Volume and
Level of Activity for the Asset or Liability Have Significantly
Decreased and Identifying Transactions That Are Not Orderly,
(ii) ASC 320, Recognition and Presentation of Other-Than-
Temporary Impairments, and (iii) ASC 825, Interim Disclosures
about Fair Value of Financial Instruments, which collectively
provide additional guidance and require additional disclosure
regarding determining and reporting fair values for certain
assets and liabilities. We adopted the three accounting stan-
dards updates in the second quarter of 2009 with no material
impact to our consolidated financial statements. In September
2009, the FASB issued an update to ASC 820, Fair Value
Measurements and Disclosures – Investments in Certain Entities
That Calculate Net Asset Value per Share (or Its Equivalent).
The ASU provides a practical means for measuring the fair value
of investments in certain entities that calculate net asset value
per share. The ASU is effective for the first reporting period
ending after December 15, 2009. We adopted the provisions
and disclosure requirements of this ASU in December 2009 with
no material impact to our consolidated financial statements.
In December 2007, the FASB issued an update to ASC 810,
Consolidation, to establish accounting and reporting standards
for the noncontrolling interest in a subsidiary and for the decon-
solidation of a subsidiary in an effort to improve the relevance,
comparability and transparency of the financial information that
a reporting entity provides. On January 1, 2009, we adopted
this statement with no change to our consolidated financial
statements as amounts are immaterial.
In December 2007, the FASB issued an update to ASC 805,
Business Combinations, to establish principles and requirements
for the recognition and measurement of assets, liabilities and
goodwill, and requires that most transaction and restructuring
costs related to the acquisition be expensed. We have applied
the provisions of this ASC for business combinations with an
acquisition date on or after January 1, 2009.
In March 2008, the FASB issued an update to ASC 815,
Disclosures about Derivative Instruments and Hedging Activities,
to require qualitative disclosures about objectives and strategies
for using derivatives and quantitative data about the fair value
of and gains and losses on derivative contracts. We adopted
the new disclosure requirements in the first quarter of 2009.
In June 2008, the FASB issued an update to ASC 260,
Determining Whether Instruments Granted in Share-Based
Payment Transactions Are Participating Securities, to clarify
that all unvested share-based payments that contain rights
to non-forfeitable dividends are participating securities and
shall be included in the computation of both basic and diluted
earnings per share. On January 1, 2009, we adopted this ASC
and have not applied the provisions to prior year quarters as
the impact is immaterial.
In December 2008, the FASB issued an update to ASC 715,
Employers’ Disclosures about Postretirement Benefit Plan Assets,
to require the disclosures of investment policies and strategies,
major categories of plan assets, fair value measurement of
plan assets and significant concentration of credit risks. We
adopted the new disclosure requirements in the fourth quarter
of 2009. See Note 14 of the Notes to Consolidated Financial
Statements in Item 8 herein for further information on the
impact of this standard.
NOTE 2. PENDING MERGER WITH BJ SERVICES
On August 30, 2009, the Company and its subsidiary
and BJ Services Company (“BJ Services”) entered into a merger
agreement (the “Merger Agreement”) pursuant to which
the Company will acquire 100% of the outstanding common
stock of BJ Services in exchange for newly issued shares of the
Company’s common stock and cash. BJ Services is a leading
provider of pressure pumping and oilfield services. The Merger
Agreement and the merger have been approved by the Board
of Directors of both the Company and BJ Services. Consum-
mation of the merger is subject to the approval of the stock-
holders of the Company and BJ Services’ stockholders at