Danaher 2009 Annual Report Download - page 71

Table of Contents
Fair Value of Financial Instruments—For cash and equivalents, the carrying amount is a reasonable estimate of fair value. For long-term debt, where quoted
market prices are not available, rates available for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt.
Goodwill and Other Intangible Assets —Goodwill and other intangible assets result from the Company’s acquisition of existing businesses. In accordance with
accounting standards related to business combinations, goodwill amortization ceased effective January 1, 2002, however, amortization of certain identifiable
intangible assets, primarily comprising customer relationships and acquired technology, continues over the estimated useful lives of the identified asset. Refer
to Notes 2 and 6 for additional information.
Revenue Recognition—As described above, the Company derives revenues primarily from the sale of professional, medical, industrial, commercial and
consumer products and services. For revenue related to a product or service to qualify for recognition, there must be persuasive evidence of a sale, delivery
must have occurred or the services must have been rendered, the price to the customer must be fixed and determinable and collectibility of the balance must be
reasonably assured. The Company’s standard terms of sale are FOB Shipping Point and, as such, the Company principally records revenue for product sales
upon shipment. If any significant obligations to the customer with respect to such sale remain to be fulfilled following shipment, typically involving
obligations relating to installation and acceptance by the buyer, revenue recognition is deferred until such obligations have been fulfilled. Product returns
consist of estimated returns for products sold and are recorded as a reduction in reported revenues at the time of sale. Customer allowances and rebates,
consisting primarily of volume discounts and other short-term incentive programs, are recorded as a reduction in reported revenues at the time of sale because
these allowances reflect a reduction in the purchase price. Product returns, customer allowances and rebates are estimated based on historical experience and
known trends. Revenue related to separately priced extended warranty and product maintenance agreements is recognized as revenue over the term of the
agreement.
Revenues for contractual arrangements consisting of multiple elements (i.e., deliverables) are recognized for the separate elements when the product or services
that are part of the multiple element arrangement have value on a stand-alone basis, fair value of the separate elements exists (or in the case of software related
products, vendor specific objective evidence of fair value) and, in arrangements that include a general right of refund relative to the delivered element,
performance of the undelivered element is considered probable and substantially in the Company’s control. While determining fair value and identifying
separate elements requires judgment, generally the fair value of each separate element is identifiable as the elements are also sold unaccompanied by other
elements.
Shipping and Handling—Shipping and handling costs are included as a component of cost of sales. Shipping and handling costs billed to customers are
included in sales.
Research and Development—The Company conducts research and development activities for the purpose of developing new products, enhancing the
functionality, effectiveness, ease of use and reliability of the Company’s existing products and expanding the applications for which uses of the Company’s
products are appropriate. Research and development costs are expensed as incurred.
Income Taxes— Deferred tax liabilities and assets are determined based on the difference between the financial statement and tax basis of assets and liabilities
using enacted rates expected to be in effect during the year in which the differences reverse. The effect on deferred tax assets and liabilities due to a change in
tax rates is recognized in income tax expense in the period that includes the enactment date. A tax benefit or expense is recognized for the net change in the
deferred tax asset or liability during the year and the current tax liability for the year. The Company accounts for uncertain tax positions by recognizing the
financial statement effects of a tax position only when, based upon the technical merits, it is “more-likely-than-not” that the position will be sustained upon
examination. The Company recognizes potential accrued interest and penalties associated with unrecognized tax positions within its global operations in income
tax expense. Refer to Note 14 for additional information.
Restructuring— The Company periodically initiates restructuring activities to appropriately position the Company’s cost base for prevailing economic
conditions and associated customer demand. Costs associated with restructuring actions can include one-time termination benefits and related charges in
addition to facility closure, contract termination and other related activities. The Company records the cost of the restructuring activities when the associated
liability is incurred. Refer to Note 17 for additional information.
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Source: DANAHER CORP /DE/, 10-K, February 24, 2010 Powered by Morningstar® Document Research℠
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