Estee Lauder 2010 Annual Report Download - page 119

118 THE EST{E LAUDER COMPANIES INC.
In April 2009, the FASB issued authoritative guidance
to require that assets acquired and liabilities assumed in a
business combination that arise from contingencies be
recognized at fair value if fair value can be reasonably
determined. If the fair value of such assets or liabilities
cannot be reasonably determined, then they would gener-
ally be recognized in accordance with certain other pre-
existing accounting standards. This guidance also amends
the subsequent accounting for assets and liabilities arising
from contingencies in a business combination and certain
other disclosure requirements. This guidance became
effective for assets or liabilities arising from contingencies
in business combinations that are consummated on or
after the beginning of the Company’s fiscal 2010 and did
not have an impact on the Company’s consolidated finan-
cial statements.
In December 2008, the FASB issued authoritative
guidance to require employers to provide additional dis-
closures about plan assets of a defined benefit pension or
other post-retirement plan. These disclosures should prin-
cipally include information detailing investment policies
and strategies, the major categories of plan assets, the
inputs and valuation techniques used to measure the fair
value of plan assets and an understanding of significant
concentrations of risk within plan assets. While earlier
application of this guidance is permitted, the required dis-
closures shall be provided for fiscal years ending after
December 15, 2009 (i.e., the Company’s fiscal 2010).
Upon initial application, this guidance is not required to
be applied to earlier periods that are presented for com-
parative purposes. The adoption of this guidance did not
have a material impact on the Company’s consolidated
financial statements. See Note 13 — Pension, Deferred
Compensation and Post-retirement Benefit Plans.
In November 2008, the FASB issued authoritative guid-
ance regarding the accounting for defensive intangible
assets. Defensive intangible assets are assets acquired in a
business combination that the acquirer (a) does not intend
to use or (b) intends to use in a way other than the assets’
highest and best use as determined by an evaluation of mar-
ket participant assumptions. While defensive intangible
assets are not being actively used, they are likely contribut-
ing to an increase in the value of other assets owned by the
acquiring entity. This guidance will require defensive intan-
gible assets to be accounted for as separate units of
accounting at the time of acquisition and the useful life
of such assets would be based on the period over which the
assets will directly or indirectly affect the entity’s cash flows.
This guidance is to be applied prospectively for defensive
intangible assets acquired on or after the beginning of the
fair-value measurement disclosure guidance about the
level of disaggregation of assets and liabilities, and infor-
mation about the valuation techniques and inputs used in
estimating Level 2 and Level 3 fair-value measurements.
Except for certain detailed Level 3 disclosures, which are
effective for fiscal years beginning after December 15,
2010 and interim periods within those years, the new
guidance became effective for the Company’s fiscal 2010
third quarter. The Company did not have transfers of
assets and liabilities in or out of Level 1 and Level 2 fair-
value measurements. The adoption of this disclosure-only
guidance is included in Note 12 — Fair Value Measure-
ments and Note 13 — Pension, Deferred Compensation
and Post-retirement Benefit Plans and did not have an
impact on the Company’s consolidated financial results.
In August 2009, the FASB issued authoritative guid-
ance to provide clarification on measuring liabilities at fair
value when a quoted price in an active market is not avail-
able. In these circumstances, a valuation technique should
be applied that uses either the quote of the liability when
traded as an asset, the quoted prices for similar liabilities
or similar liabilities when traded as assets, or another
valuation technique consistent with existing fair value
measurement guidance, such as an income approach or
a market approach. The new guidance also clarifies that
when estimating the fair value of a liability, a reporting
entity is not required to include a separate input or adjust-
ment to other inputs relating to the existence of a restric-
tion that prevents the transfer of the liability. This guidance
became effective for the Company’s fiscal 2010 second
quarter and did not have an impact on the Company’s
consolidated financial statements.
In June 2009, the FASB established the FASB Account-
ing Standards Codification™ (the “Codification”) as the
single source of authoritative U.S. GAAP recognized by
the FASB to be applied by nongovernmental entities.
Rules and interpretive releases of the SEC under authority
of federal securities laws are also sources of authoritative
U.S. GAAP for SEC registrants. The Codification did not
have a material impact on the Company’s consolidated
financial statements upon adoption. Accordingly, the
Company’s notes to consolidated financial statements will
explain accounting concepts rather than cite the topics of
specific U.S. GAAP.
In April 2009, the FASB issued authoritative guidance
that principally requires publicly traded companies to pro-
vide disclosures about fair value of financial instruments in
interim financial information. The adoption of this disclo-
sure-only guidance in the Company’s fiscal 2010 first
quarter did not have an impact on the Company’s con-
solidated financial results.