Motorola 2011 Annual Report Download - page 74

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tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected
to be recovered or settled. The effect on deferred tax assets and liabilities from a change in tax rates is recognized in
the period that includes the enactment date.
Deferred tax assets are reduced by valuation allowances if, based on the consideration of all available evidence,
it is more-likely-than-not that some portion of the deferred tax asset will not be realized. Significant weight is given
to evidence that can be objectively verified. The Company evaluates deferred income taxes on a quarterly basis to
determine if valuation allowances are required by considering available evidence. Deferred tax assets are realized by
having sufficient future taxable income to allow the related tax benefits to reduce taxes otherwise payable. The
sources of taxable income that may be available to realize the benefit of deferred tax assets are future reversals of
existing taxable temporary differences, future taxable income exclusive of reversing temporary differences and
carryforwards, taxable income in carry-back years and tax planning strategies that are both prudent and feasible.
The Company recognizes the effect of income tax positions only if sustaining those positions is more-likely-
than-not. Changes in recognition or measurement are reflected in the period in which a change in judgment occurs.
The Company records interest related to unrecognized tax benefits in Interest expense and penalties in Selling,
general and administrative expenses in the Company’s consolidated statements of operations.
Sales and Use Taxes: The Company records taxes imposed on revenue-producing transactions, including
sales, use, value added and excise taxes, on a net basis with such taxes excluded from revenue.
Long-term Receivables: Long-term receivables include trade receivables where contractual terms of the note
agreement are greater than one year. Long-term receivables are considered impaired when management determines
collection of all amounts due according to the contractual terms of the note agreement, including principal and
interest, is no longer probable. Impaired long-term receivables are valued based on the present value of expected
future cash flows discounted at the receivable’s effective interest rate, or the fair value of the collateral if the
receivable is collateral dependent. Interest income and late fees on impaired long-term receivables are recognized
only when payments are received. Previously impaired long-term receivables are no longer considered impaired and
are reclassified to performing when they have performed under a workout or restructuring for four consecutive
quarters.
Foreign Currency: Certain of the Company’s non-U.S. operations use their respective local currency as their
functional currency. Those operations that do not have the U.S. dollar as their functional currency translate assets
and liabilities at current rates of exchange in effect at the balance sheet date and revenues and expenses using rates
that approximate those in effect during the period. The resulting translation adjustments are included as a
component of Accumulated other comprehensive income (loss) in the Company’s consolidated balance sheets. For
those operations that have the U.S. dollar as their functional currency, transactions denominated in the local
currency are measured in U.S. dollars using the current rates of exchange for monetary assets and liabilities and
historical rates of exchange for nonmonetary assets. Gains and losses from remeasurement of monetary assets and
liabilities are included in Other within Other income (expense) within the Company’s consolidated statements of
operations.
Derivative Instruments: Gains and losses on hedges of existing assets or liabilities are marked-to-market and
the result is included in Other within Other income (expense) within the Company’s consolidated statements of
operations. Gains and losses on financial instruments that qualify for hedge accounting and are used to hedge firm
future commitments or forecasted transactions are deferred until such time as the underlying transactions are
recognized or recorded immediately when the transaction is no longer expected to occur. Gains or losses on
financial instruments that do not qualify as hedges are recognized immediately as income or expense.
Earnings (Loss) Per Share: The Company calculates its basic earnings (loss) per share based on the weighted-
average effect of all common shares issued and outstanding. Net earnings (loss) attributable to Motorola Solutions,
Inc. is divided by the weighted average common shares outstanding during the period to arrive at the basic earnings
(loss) per share. Diluted earnings (loss) per share is calculated by dividing net earnings (loss) attributable to
Motorola Solutions, Inc. by the sum of the weighted average number of common shares used in the basic earnings
(loss) per share calculation and the weighted average number of common shares that would be issued assuming
exercise or conversion of all potentially dilutive securities, excluding those securities that would be anti-dilutive to
the earnings (loss) per share calculation. Both basic and diluted earnings (loss) per share amounts are calculated for