Oracle 2009 Annual Report Download - page 100

Table of Contents
ORACLE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
May 31, 2010
of cancellation is remote, we then recognize revenues once all of the criteria described above have been met. If such a determination cannot be made, revenues
are recognized upon the earlier of cash receipt or approval of the applicable funding provision by the governmental entity.
We assess whether fees are fixed or determinable at the time of sale and recognize revenues if all other revenue recognition requirements are met. Our standard
payment terms are net 30 days. However, payment terms may vary based on the country in which the agreement is executed. Payments that are due within six
months are generally deemed to be fixed or determinable based on our successful collection history on such arrangements, and thereby satisfy the required
criteria for revenue recognition.
While most of our arrangements for sales within our software and hardware systems businesses include short-term payment terms, we have a standard practice of
providing long-term financing to creditworthy customers through our financing division. Since fiscal 1989, when our financing division was formed, we have
established a history of collection, without concessions, on these receivables with payment terms that generally extend up to five years from the contract date.
Provided all other revenue recognition criteria have been met, we recognize new software license revenues and hardware systems products revenues for these
arrangements upon delivery, net of any payment discounts from financing transactions. We have generally sold receivables financed through our financing
division on a non-recourse basis to third party financing institutions and we classify the proceeds from these sales as cash flows from operating activities in our
consolidated statements of cash flows. We account for the sales of these receivables as “true sales” as defined in ASC 860, Transfers and Servicing.
In addition, we sell hardware products to leasing companies that, in turn, lease these products to end-users. In transactions where the leasing companies have no
recourse to us in the event of default by the end-user, we recognize revenue at point of shipment or point of delivery, depending on the shipping terms and if all
the other revenue recognition criteria have been met. In arrangements where the leasing companies have more than insignificant recourse to us in the event of
default by the end-user (defined as recourse leasing), we recognize both the product revenue and the related cost of the product as the payments are made to the
leasing company by the end-user, generally ratably over the lease term.
Our customers include several of our suppliers and on rare occasion, we have purchased goods or services for our operations from these vendors at or about the
same time that we have sold our products to these same companies (Concurrent Transactions). Software license agreements or sales of hardware systems that
occur within a three-month time period from the date we have purchased goods or services from that same customer are reviewed for appropriate accounting
treatment and disclosure. When we acquire goods or services from a customer, we negotiate the purchase separately from any sales transaction, at terms we
consider to be at arm’s length, and settle the purchase in cash. We recognize new software license revenues or hardware systems product revenues from
Concurrent Transactions if all of our revenue recognition criteria are met and the goods and services acquired are necessary for our current operations.
Business Combinations
In fiscal 2010, we adopted ASC 805, Business Combinations, which revised the accounting guidance that we were required to apply for our acquisitions in
comparison to prior fiscal years. The underlying principles are similar to the previous guidance and require that we recognize separately from goodwill the assets
acquired and the liabilities assumed, generally at their acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of consideration
transferred and the net of the acquisition date fair values of the assets acquired and the liabilities assumed. 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 acquisition date, our estimates are inherently
uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, we record adjustments to
the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of
the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to our consolidated statements of operations.
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Source: ORACLE CORP, 10-K, July 01, 2010 Powered by Morningstar® Document Research℠