DIRECTV 2009 Annual Report Download - page 97

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DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(continued)
exchange rates will result in gains or losses, which will be recorded in ‘‘Other, net’’ in the Consolidated
Statements of Operations related to the revaluation of U.S. dollar denominated monetary assets and
liabilities, such as cash deposits, notes payable and capital lease obligations held by Sky Brazil. During
2009, we recorded a net foreign currency transaction gain of $62 million in ‘‘Other, net’’ in the
Consolidated Statements of Operations related to U.S. dollar denominated monetary assets and
liabilities held by Sky Brazil.
Fair Value Recognition, Measurement and Disclosure. On January 1, 2008 we adopted new
accounting standards which permit, but do not require, companies to report at fair value the majority
of recognized financial assets, financial liabilities and firm commitments. Under this standard,
unrealized gains and losses on items for which the fair value option is elected are reported in earnings
at each subsequent reporting date. Our adoption of these accounting standards did not have any effect
on our consolidated financial statements, as we have not elected to report subject instruments at fair
value.
On January 1, 2008 we adopted new accounting standards for fair value measurements which
defines fair value, sets out a framework for measuring fair value under accounting principles generally
accepted in the United States of America, or GAAP, and expands disclosures about fair value
measurements of assets and liabilities to include disclosure about inputs used in the determination of
fair value using the following three categories:
Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable market based inputs or unobservable inputs that are corroborated by market
data.
Level 3: Unobservable inputs that are not corroborated by market data.
The new accounting standards apply under other accounting pronouncements previously issued by
the Financial Accounting Standards Board, or FASB, that require or permit fair value measurements.
Our adoption of the new accounting standards did not have any effect on our consolidated financial
statements.
Payments to Manufacturers and Resellers. On January 1, 2008 we adopted new accounting
standards which provide guidance to service providers regarding the proper reporting of consideration
given to manufacturers or resellers of equipment necessary for an end-customer to receive its services.
Depending on the circumstances, such consideration is reported as either an expense or a reduction of
revenues. Our adoption of the new accounting standards did not have any effect on our consolidated
financial statements.
Uncertain Tax Positions. We adopted accounting standards for accounting for uncertainty in
income taxes on January 1, 2007, the cumulative effect of which resulted in a $5 million increase to
‘‘Accumulated deficit’’ in the Consolidated Balance Sheets. As of the date of adoption, our
unrecognized tax benefits and accrued interest totaled $204 million, including $166 million of tax
positions the recognition of which would affect the annual effective income tax rate. As of the date of
adoption, we have accrued $45 million in interest and penalties as part of our liability for unrecognized
tax benefits. See Note 10 for additional information regarding unrecognized tax benefits.
Pensions. On December 31, 2007, we adopted new accounting standards that requires the
measurement of plan assets and benefit obligations as of the date of our fiscal year end and accordingly
resulted in a change in our measurement date, which was previously November 30. As a result of the
adoption of this provision, we recorded an adjustment of $1 million to recognize net periodic benefit
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