Berkshire Hathaway 2012 Annual Report Download - page 40

Notes to Consolidated Financial Statements (Continued)
(1) Significant accounting policies and practices (Continued)
(t) New accounting pronouncements (Continued)
Berkshire adopted ASU 2010-26 on a prospective basis. The impact of the adoption of this new standard primarily
relates to certain advertising costs of GEICO, which were capitalized prior to the adoption of ASU 2010-26, but are no
longer eligible to be capitalized. The adoption of this new standard did not have a material effect on our Consolidated
Financial Statements.
As of January 1, 2012, we also adopted ASU 2011-04, “Amendments to Achieve Common Fair Value Measurement
and Disclosure Requirements in U.S. GAAP and IFRSs.” As a result of adopting ASU 2011-04, we have expanded our
fair value disclosures.
In December 2011, the FASB issued ASU 2011-11, “Disclosures about Offsetting Assets and Liabilities” and in
January 2013, the FASB issued ASU 2013-01, “Clarifying the Scope of Disclosures about Offsetting Assets and
Liabilities.” ASU 2011-11, as c1arified, enhances disclosures surrounding offsetting (netting) assets and liabilities. The
clarified standard applies to derivatives, repurchase agreements and securities lending transactions and requires
companies to disclose gross and net information about financial instruments and derivatives eligible for offset and to
disclose financial instruments and derivatives subject to master netting arrangements in financial statements. The
clarified standard is effective for fiscal years beginning on or after January 1, 2013 and is required to be applied
retrospectively.
In July 2012, the FASB issued ASU 2012-02, “Testing Indefinite-Lived Intangible Assets for Impairment.” ASU 2012-
02 allows an entity to first assess qualitative factors in determining whether events and circumstances indicate that it is
more-likely-than not that an indefinite-lived intangible asset is impaired. If an entity determines that it is not more-
likely-than not that the indefinite-lived intangible asset is impaired, then the entity is not required to perform a
quantitative impairment test. ASU 2012-02 is effective for fiscal years beginning after September 15, 2012.
In February 2013, the FASB issued ASU 2013-02, “Reporting of Amounts Reclassified Out of Accumulated Other
Comprehensive Income.” ASU 2013-02 requires disclosure by component of other comprehensive income of the
amounts reclassified out of accumulated other comprehensive income by component and into net earnings for the
reporting period. ASU 2013-02 is effective for reporting periods beginning on or after December 15, 2012.
We do not believe that the adoption of these new pronouncements will have a material effect on our Consolidated
Financial Statements.
(2) Significant business acquisitions
Our long-held acquisition strategy is to acquire businesses with consistent earning power, good returns on equity and able
and honest management at sensible prices. In 2012, we completed several smaller-sized business acquisitions, most of which we
consider as “bolt-on” acquisitions to several of our existing business operations. Aggregate consideration paid in 2012 for
acquisitions was approximately $3.2 billion, which included $438 million for entities that will develop, construct and
subsequently operate renewable energy generation facilities. We do not believe that these acquisitions are material, individually
or in the aggregate, to our Consolidated Financial Statements.
On September 16, 2011, Berkshire completed the acquisition of The Lubrizol Corporation (“Lubrizol”) pursuant to a
merger agreement, under which Berkshire acquired all of the outstanding shares of Lubrizol common stock for cash of $135 per
share (approximately $8.7 billion in the aggregate). Lubrizol, based in Cleveland, Ohio, is an innovative specialty chemical
company that produces and supplies technologies to customers in the global transportation, industrial and consumer markets.
These technologies include additives for engine oils, other transportation-related fluids and industrial lubricants, as well as
additives for gasoline and diesel fuel. In addition, Lubrizol makes ingredients and additives for personal care products and
pharmaceuticals; specialty materials, including plastics; and performance coatings. Lubrizol’s industry-leading technologies in
additives, ingredients and compounds enhance the quality, performance and value of customers’ products, while reducing their
environmental impact. We accounted for the Lubrizol acquisition pursuant to the acquisition method. The valuation of the
identified assets and liabilities and the resulting excess amount recorded as goodwill as of the acquisition date was completed as
of December 31, 2011. Lubrizol’s financial results are included in our Consolidated Financial Statements beginning as of
September 16, 2011.
On February 12, 2010, we acquired all of the outstanding common stock of the Burlington Northern Santa Fe Corporation
(“BNSF”) that we did not already own (about 264.5 million shares or 77.5% of the outstanding shares) for aggregate
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