Blizzard 2011 Annual Report Download - page 43

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Stock-Based Compensation
We estimate the value of stock-based payment awards on the measurement date using a binomial-lattice model. Our
determination of fair value of stock-based payment awards on the date of grant using an option-pricing model is affected by our
stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but
are not limited to, our expected stock price volatility over the term of the awards, and actual and projected employee stock option
exercise behaviors.
For a detailed discussion of the application of these and other accounting policies see Note 2 of the Notes to
Consolidated Financial Statements included in this Annual Report.
Recently Issued Accounting Pronouncements
In May 2011, the FASB issued an update to the accounting rules for fair value measurement to provide a consistent
definition of fair value and ensure that the fair value measurement and disclosure requirements are similar between U.S. GAAP
and International Financial Reporting Standards (“IFRS”). This update changes certain fair value measurement principles and
enhances the disclosure requirements for fair value measurements. This update does not extend the use of fair value accounting,
but provides guidance on how it should be applied where its use is already required or permitted by other standards within
U.S. GAAP or IFRS. This update is effective for interim and annual periods beginning after December 15, 2011 and is applied
prospectively. The adoption of this update on January 1, 2012 will not have a material impact on our consolidated financial
statements.
In June 2011, the FASB issued an update to the accounting on comprehensive income to increase the prominence of
items reported in other comprehensive income and to facilitate convergence of U.S. GAAP and IFRS. This update requires that
all non-owner changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income or
in two separate but consecutive statements. This update does not change the items that must be reported in other comprehensive
income or when an item of other comprehensive income must be reclassified to net income. Further, this update does not affect
how earnings per share is calculated or presented. This update is effective for interim and annual periods beginning after
December 15, 2011 and is applied retrospectively. The adoption of this update on January 1, 2012 will not have a material
impact on our consolidated financial statements.
In September 2011, the FASB issued an update to the authoritative guidance related to goodwill impairment testing.
This update gives companies the option to first perform a qualitative assessment to determine whether it is more likely than not
that the fair value of a reporting unit is less than its carrying amount before performing the two-step test mandated prior to the
update. If, after assessing the totality of events and circumstances, a company determines it is more likely than not that the fair
value of a reporting unit is less than its carrying amount, then it must perform the two-step test. Otherwise, a company may skip
the two-step test. Companies are not required to perform the qualitative assessment and may, instead proceed directly to the first
step of the two-part test. This update is effective for annual and interim goodwill impairment tests performed for fiscal years
beginning after December 15, 2011. The adoption of this update on January 1, 2012 will not have a material impact on our
consolidated financial statements.
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