Oracle 2008 Annual Report Download - page 88

Table of Contents
ORACLE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
May 31, 2009
While we use our best estimates and assumptions as a part of the purchase price allocation process to
accurately value assets acquired and liabilities assumed at the business combination date, our estimates and
assumptions are inherently uncertain and subject to refinement. As a result, during the purchase price
allocation period, which may be up to one year from the business combination date, we record adjustments to
the assets acquired and liabilities assumed, with the corresponding offset to goodwill. With the exception of
unresolved income tax matters or decreases to estimated restructuring liabilities, we record adjustments to
assets acquired or liabilities assumed subsequent to the purchase price allocation period in our operating
results in the period in which the adjustments were determined.
Fiscal 2010
In fiscal 2010, we will adopt and account for our acquisitions, including our pending acquisition of Sun
Microsystems, Inc. (see Note 2), in accordance with FASB Statement No. 141 (revised 2007), Business
Combinations, and related position. Pursuant to Statement 141(R)’s acquisition method of accounting, we
will recognize separately from goodwill, the identifiable assets acquired, the liabilities assumed, and any
noncontrolling interests in an acquiree, generally at the acquisition date fair value as defined by FASB
Statement No. 157, Fair Value Measurements. Goodwill as of the acquisition date is measured as the excess
of consideration transferred, which is also generally measured at fair value, and the net of the acquisition date
amounts of the identifiable assets acquired and the liabilities assumed.
The acquisition method requires us to use significant estimates and assumptions, including fair value
estimates, as of the business combination date and to refine those estimates, as necessary, during the
measurement period (defined as the period, not to exceed one year, in which we may adjust the provisional
amounts recognized for a business combination) in a manner that is generally similar to that under Statement
141 (see above). The additional policies that we will adopt in order to account for, and a discussion of the
impact of, the more significant areas of Statement 141(R) that we expect will affect our consolidated financial
statements are provided below.
Upon our adoption of Statement 141(R), any changes to deferred tax asset valuation allowances and liabilities
related to uncertain tax positions will be recorded in current period income tax expense, unless any such
changes are identified during the measurement period and relate to new information obtained about facts and
circumstances that existed as of the acquisition date, in which case the change is considered a measurement
period adjustment and is recorded to goodwill. Upon our adoption of Statement 141(R) in fiscal 2010, this
requirement is applicable to all of our acquisitions regardless of the acquisition date.
Statement 141(R) requires that acquired company restructuring activities initiated by us must be accounted for
separately from the business combination in accordance with FASB Statement No. 146, Accounting for Costs
Associated with Exit or Disposal Activities. We accounted for our Oracle-based restructuring activities in
accordance with Statement 146 for fiscal 2009, 2008 and 2007. Statement 146 requires that a liability for a
cost associated with an exit or disposal activity be recognized and measured initially at its fair value in the
period in which the liability is incurred. In order to incur a liability pursuant to Statement 146, our
management must have established and approved a plan of restructuring in sufficient detail. A liability for a
cost associated with involuntary termination benefits is recorded when benefits have been communicated and
a liability for a cost to terminate an operating lease or other contract is incurred when the contract has been
terminated in accordance with the contract terms or we have ceased using the right conveyed by the contract,
such as vacating a leased facility. Changes in estimates associated with liabilities recognized for restructuring
plans pertaining to acquisitions completed prior to fiscal 2010 will continue to be accounted for pursuant to
those accounting standards and descriptions provided above.
Upon our adoption of Statement 141(R), we will record costs incurred to effect an acquisition to the
acquisition related and other line in our consolidated statement of operations as the expenses are incurred.
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Source: ORACLE CORP, 10-K, June 29, 2009 Powered by Morningstar® Document Research℠