Blizzard 2008 Annual Report Download - page 41

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27
Recently Issued Accounting Standards
In December 2007, the Financial Accounting Standards Board (“FASB”) issued
Statement of Financial Accounting Standards (“SFAS”) No. 141 (revised 2007), “Business
Combinations” (“SFAS No. 141(R)”). SFAS No. 141(R) expands the definition of a business
combination and requires acquisitions to be accounted for at fair value. These fair value provisions
will be applied to contingent consideration, in-process research and development and acquisition
contingencies. Purchase accounting adjustments will be reflected during the period in which an
acquisition was originally recorded. Additionally, the new standard requires transaction costs and
restructuring charges to be expensed. Furthermore, to the extent the Company has changes to its
uncertain tax positions associated with any subsidiaries acquired in previous business
combinations for which goodwill exists subsequent to December 31, 2008, such changes to the
uncertain tax positions will be recorded in the Company’s Consolidated Statements of Operations
rather than as a reduction in goodwill, which was the accounting treatment in place prior to the
adoption of SFAS 141(R). SFAS No. 141(R) is effective for the Company for acquisitions closing
during and subsequent to the first quarter of 2009.
In June 2007, the FASB ratified the Emerging Issues Task Force’s (“EITF”) consensus
conclusion on EITF 07-03, “Accounting for Advance Payments for Goods or Services to Be Used
in Future Research and Development.” EITF 07-03 addresses the diversity which exists with
respect to the accounting for the non-refundable portion of a payment made by a research and
development entity for future research and development activities. Under this conclusion, an entity
is required to defer and capitalize non-refundable advance payments made for research and
development activities until the related goods are delivered or the related services are performed.
EITF 07-03 is effective for interim or annual reporting periods in fiscal years beginning after
December 15, 2007 and requires prospective application for new contracts entered into after the
effective date. The adoption of EITF 07-03 did not have a material impact on our Consolidated
Financial Statements.
In March 2008, the FASB issued Statement No. 161, “Disclosures about Derivative
Instruments and Hedging Activities-an amendment of FASB Statement No. 133” (“SFAS
No. 161”) SFAS No. 161 changes the disclosure requirements for derivative instruments and
hedging activities. Entities are required to provide enhanced disclosures about (a) how and why an
entity uses derivative instruments, (b) how derivative instruments and related hedged items are
accounted for under Statement No. 133 and its related interpretations, and (c) how derivative
instruments and related hedged items affect an entity’s financial position, financial performance,
and cash flows. The guidance in SFAS No. 161 is effective for financial statements issued for
fiscal years and interim periods beginning after November 15, 2008, with early application
encouraged. SFAS No. 161 encourages, but does not require, comparative disclosures for earlier
periods at initial adoption. The adoption of SFAS No. 161 did not have a material impact on our
Consolidated Financial Statements.
In April 2008, the FASB issued FASB Staff Positions (“FSP”) SFAS No. 142-3,
“Determination of the Useful Life of Intangible Assets” (“FSP FAS 142-3”). FSP FAS 142-3
amends the factors an entity should consider in developing renewal or extension assumptions used
in determining the useful life of recognized intangible assets under SFAS No. 142, “Goodwill and
Other Intangible Assets” This guidance for determining the useful life of a recognized intangible
asset applies prospectively to intangible assets acquired individually or with a group of other
assets in either an asset acquisition or business combination. FSP FAS 142-3 is effective for fiscal
years, and interim periods within those fiscal years, beginning after December 15, 2008, and early