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Table of Contents
DELL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Consolidated Financial Statements. See Note 3 of Notes to Consolidated Financial Statements for additional information.
– Impairments of Debt Securities — The pronouncement changed the impairment recognition and presentation model for debt
securities. An other-than-temporary impairment is now triggered when there is intent to sell the security, it is more likely than not
that the security will be required to be sold before recovery in value, or the security is not expected to recover its entire amortized
cost basis ("credit related loss"). Credit related losses on debt securities will be considered an other-than-temporary impairment
recognized in earnings, and any other losses due to a decline in fair value relative to the amortized cost deemed not to be
other-than-temporary will be recorded in other comprehensive income. Dell adopted the pronouncement in the second quarter of
Fiscal 2010. The adoption did not have a material impact on Dell's Consolidated Financial Statements. See Note 3 of Notes to
Consolidated Financial Statements for additional information.
– Subsequent Events — The pronouncement codifies existing standards of accounting for and disclosures of events that occur after the
balance sheet date but before financial statements are issued or are available to be issued. Dell adopted the pronouncement in the
second quarter of Fiscal 2010. The adoption did not have any impact on Dell's Consolidated Financial Statements.
Recently Issued but Not Yet Adopted Accounting Pronouncements
– Revenue Arrangements with Multiple Deliverables — The guidance amends the current revenue recognition guidance for multiple
deliverable arrangements. It allows the use of management's best estimate of selling price for individual elements of an arrangement
when vendor specific objective evidence, or third-party evidence is unavailable. Additionally, it eliminates the residual method of
revenue recognition in accounting for multiple deliverable arrangements. The guidance is effective for fiscal years beginning on or
after June 15, 2010 (Dell's Fiscal 2012), but early adoption is permitted. Management does not expect the adoption of this guidance
to have a material impact on Dell's Consolidated Financial Statements. Dell has elected to early adopt the guidance in the first quarter
of Fiscal 2011 on a prospective basis.
– Revenue Arrangements with Software Elements — The pronouncement modifies the scope of the software revenue recognition
guidance to exclude tangible products that contain both software and non-software components that function together to deliver the
product's essential functionality. The pronouncement is effective for fiscal years beginning on or after June 15, 2010 (Dell's Fiscal
2012), but early adoption is permitted. This guidance must be adopted in the same period an entity adopts the amended revenue
arrangements with multiple deliverables guidance described above. Management does not expect the adoption of this guidance to
have a material impact on Dell's Consolidated Financial Statements. Dell has elected to early adopt the guidance in the first quarter of
Fiscal 2011 on a prospective basis.
– Variable Interest Entities and Transfers of Financial Assets and Extinguishments of Liabilities — The pronouncement on transfers of
financial assets and extinguishments of liabilities removes the concept of a qualifying special-purpose entity and removes the
exception from applying variable interest entity accounting to qualifying special-purpose entities. The new guidance on variable
interest entities requires an entity to perform an ongoing analysis to determine whether the entity's variable interest or interests give it
a controlling financial interest in a variable interest entity. The pronouncements are effective for fiscal years beginning after
November 15, 2009. Dell will adopt the pronouncements for interim and annual reporting periods beginning in the first quarter of
Fiscal 2011. Dell expects the adoption of these two pronouncements to result in the consolidation of its qualifying special purpose
entities beginning in the first quarter of Fiscal 2011. The impact of the required consolidations is not expected to be material to Dell's
financial position, net income, or cash flows. See Note 4 of Notes to Consolidated Financial Statements for additional information.
Reclassifications — Dell has revised the presentation of certain prior period amounts reported within cash flows from operating activities
presented in the Consolidated Statements of Cash Flows. The revision had no impact to the
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