Emerson 2011 Annual Report Download - page 26

24 | 2011 Emerson
expects to reduce the assumed investment return on
plan assets to 7.75 percent for 2012 compared with the
current 8.0 percent. Deferred actuarial losses, which
will be amortized into earnings in future years, were
$1,899 million ($1,217 million after-tax) as of September
30, 2011. Defined benefit pension plan expense for 2012
is expected to be approximately $170 million, up from
$145 million in 2011. See Notes 10 and 11.
INCOME TAXES
Income tax expense and tax assets and liabilities reflect
management’s assessment of taxes paid or expected to
be paid (received) on items included in the financial state-
ments. Uncertainty exists regarding tax positions taken
in previously filed tax returns still under examination and
positions expected to be taken in future returns. Deferred
tax assets and liabilities arise because of temporary
differences between the consolidated financial state-
ment carrying amounts of existing assets and liabilities
and their respective tax bases, and operating loss and
tax credit carryforwards. Deferred income taxes are
measured using enacted tax rates in effect for the year
in which the temporary differences are expected to be
recovered or settled. The impact on deferred tax assets
and liabilities of a change in tax rates is recognized in the
period that includes the enactment date. The Company
also pays U.S. federal income taxes, net of available
foreign tax credits, on cash repatriated from non-U.S.
locations. No provision is made for U.S. income taxes on
the undistributed earnings of non-U.S. subsidiaries where
these earnings are considered permanently invested or
otherwise indefinitely retained for continuing interna-
tional operations. Determination of the amount of taxes
that might be paid on these undistributed earnings if
eventually remitted is not practicable. See Notes 1 and 13.
NEW ACCOUNTING PRONOUNCEMENTS
In May 2011, the FASB issued updates to ASC 820,
Fair Value Measurement, resulting in common fair value
measurement and disclosure requirements for U.S. GAAP
and International Financial Reporting Standards. These
updates are effective January 1, 2012 for quarterly
and annual reporting. Adoption of this update is not
expected to have a material impact on the Company’s
financial statements.
In June 2011, the FASB issued updates to ASC 220,
Comprehensive Income, eliminating the option to present
other comprehensive income in the statement of equity.
These updates require an entity to present comprehen-
sive income as part of one continuous financial statement
that includes net earnings and other comprehensive
income or as a separate financial statement immediately
following the statement of earnings. There is no change
to the items to be reported in other comprehensive
income or when those items should be reclassed into
net earnings. These updates are effective for the first
quarter of fiscal 2013. Adoption of this update will affect
presentation only; there is no expected impact on the
Company’s financial results.
In September 2011, the FASB issued updates to ASC 350,
Intangibles – Goodwill and Other, providing an option for
companies to perform a qualitative analysis to determine
if it is more likely than not the fair value of a reporting
unit is less than its carrying amount. If the analysis
determines the fair value exceeds the carrying amount,
more extensive valuation and impairment testing need
not be performed. These updates are effective for the
first quarter of fiscal 2013; adoption of this update is not
expected to have a material impact on the Company’s
financial statements.