Estee Lauder 2010 Annual Report Download - page 120

THE EST{E LAUDER COMPANIES INC. 119
exceptions; acquisition-related costs generally will be
expensed as incurred. This guidance requires certain
financial statement disclosures to enable users to evaluate
and understand the nature and financial effects of the
business combination. This guidance must be applied
prospectively to business combinations that are consum-
mated on or after July 1, 2009. During the year ended
June 30, 2010, the Company did not have significant busi-
ness combinations. Accordingly, the adoption of this guid-
ance did not have a material impact on the Company’s
consolidated financial statements.
In December 2007, the FASB issued authoritative guid-
ance to establish accounting and reporting standards for
the noncontrolling interest in a subsidiary and for the
deconsolidation of a subsidiary. Among other require-
ments, this guidance clarifies that a noncontrolling inter-
est in a subsidiary, which is sometimes referred to as
minority interest, is to be reported as a separate compo-
nent of equity in the consolidated financial statements.
This guidance also requires consolidated net income to
include the amounts attributable to both the parent and
the noncontrolling interest and to disclose those amounts
on the face of the consolidated statement of earnings.
This guidance must be applied prospectively for fiscal
years, and interim periods within those fiscal years, begin-
ning in the Company’s fiscal 2010, except for the presen-
tation and disclosure requirements, which will be applied
retrospectively for all periods presented. The adoption of
this guidance did not have a material impact on the Com-
pany’s consolidated financial statements.
In December 2007, the FASB issued authoritative guid-
ance to address accounting for collaborative arrangement
activities that are conducted without the creation of a sepa-
rate legal entity for the arrangement. Revenues and costs
incurred with third parties in connection with the collab-
orative arrangement should be presented gross or net by
the collaborators pursuant to pre-existing accounting
standards. Payments to or from collaborators should be
presented in the income statement based on the nature of
the arrangement, the nature of the company’s business
and whether the payments are within the scope of other
accounting literature. Other detailed information related
to the collaborative arrangement is also required to be
disclosed. The requirements under this guidance must be
applied to collaborative arrangements in existence at the
beginning of the Company’s fiscal 2010 using a modified
version of retrospective application. The Company is cur-
rently not a party to significant collaborative arrangement
activities, as defined by this guidance, and therefore the
adoption of this guidance did not have an impact on
the Company’s consolidated financial statements.
Company’s fiscal 2010 and did not have an impact on the
Company’s consolidated financial statements.
In November 2008, the FASB issued authoritative guid-
ance to address questions about equity-method account-
ing. The primary issues include how the initial carrying
value of an equity method investment should be deter-
mined, how to account for any subsequent purchases and
sales of additional ownership interests, and whether the
investor must separately assess its underlying share of
the investee’s indefinite-lived intangible assets for impair-
ment. This guidance became effective beginning in the
Company’s fiscal 2010 and did not have an impact on
the Company’s consolidated financial statements.
In April 2008, the FASB issued authoritative guidance
to amend the factors that should be considered in devel-
oping renewal or extension assumptions used to deter-
mine the useful life of a recognized intangible asset and to
require additional disclosures. The guidance for determin-
ing useful lives must be applied prospectively to intangible
assets acquired after the effective date. The disclosure
requirements must be applied prospectively to all intan-
gible assets recognized as of the effective date. This guid-
ance became effective for fiscal years, and interim periods
within those fiscal years, beginning in the Company’s
fiscal 2010 and did not have a material impact on the
Company’s consolidated financial statements.
In February 2008, the FASB issued authoritative guid-
ance that permitted the delayed application of fair value
measurement accounting to nonrecurring nonfinancial
assets and nonfinancial liabilities. The Company’s nonfinan-
cial assets and nonfinancial liabilities principally consist of
(i) goodwill, other intangible assets and long-lived assets
when assessing potential impairment, (ii) intangible assets
acquired through business combinations, and (iii) liabili-
ties associated with restructuring activities. This guidance
became effective beginning in the Company’s fiscal 2010.
See Note 12 —Fair Value Measurements for further discus-
sion on the application of fair value measurements.
In December 2007, the FASB issued authoritative guid-
ance to affirm that the acquisition method of accounting
(previously referred to as the purchase method) be used
for all business combinations and for an acquirer to be
identified for each business combination. This guidance
defines the acquirer as the entity that obtains control of
one or more businesses in the business combination and
establishes the acquisition date as the date that the
acquirer achieves control. Among other requirements,
this guidance requires the acquiring entity in a business
combination to recognize the identifiable assets acquired,
liabilities assumed and any noncontrolling interest in the
acquiree at their acquisition-date fair values, with limited