Oracle 2009 Annual Report Download - page 106

Table of Contents
ORACLE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
May 31, 2010
losses related to all of our investments and net unrealized gains and losses related to the small portion of our investment portfolio that we classify as trading.
Year Ended May 31,
(in millions) 2010 2009 2008
Interest income $ 122 $ 279 $ 337
Foreign currency (losses) gains, net (148) (55) 40
Noncontrolling interests in income (95) (84) (60)
Other income, net 56 3 67
Total non-operating income (expense), net $ (65) $ 143 $ 384
Included in non-operating income (expense), net were net foreign currency losses in fiscal 2010 relating to our Venezuelan subsidiary’s operations. Effective
December 1, 2009, we designated our Venezuelan subsidiary as “highly inflationary” in accordance with ASC 830, Foreign Currency Matters, and began using
the U.S. Dollar as the subsidiary’s new functional currency. During fiscal 2010, the Venezuelan government devalued its currency and we recognized $81
million of foreign currency losses due to the remeasurement of certain assets and liabilities and conversion of certain cash balances of our Venezuelan subsidiary
into U.S. Dollars.
Income Taxes
We account for income taxes in accordance with ASC 740, Income Taxes. Deferred income taxes are recorded for the expected tax consequences of temporary
differences between the tax bases of assets and liabilities for financial reporting purposes and amounts recognized for income tax purposes. We record a
valuation allowance to reduce our deferred tax assets to the amount of future tax benefit that is more likely than not to be realized.
At the beginning of fiscal 2008, we adopted revised guidance contained in ASC 740 to account for our uncertain tax positions. The revised guidance contains a
two-step approach to recognizing and measuring uncertain tax positions taken or expected to be taken in a tax return. The first step is to determine if the weight
of available evidence indicates that it is more likely than not that the tax position will be sustained in an audit, including resolution of any related appeals or
litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. We
recognize interest and penalties related to uncertain tax positions in our provision for income taxes line of our consolidated statements of operations.
A description of our accounting policies associated with tax related contingencies and valuation allowances assumed as a part of a business combination is
provided under “Business Combinations” above.
Recent Accounting Pronouncements
Milestone Method of Revenue Recognition: In April 2010, the FASB issued Accounting Standards Update No. 2010-17, Revenue Recognition—Milestone
Method (Topic 605) – Revenue Recognition (ASU 2010-17). ASU 2010-17 provides guidance on defining the milestone and determining when the use of the
milestone method of revenue recognition for research or development transactions is appropriate. It provides criteria for evaluating if the milestone is substantive
and clarifies that a vendor can recognize consideration that is contingent upon achievement of a milestone as revenue in the period in which the milestone is
achieved, if the milestone meets all the criteria to be considered substantive. ASU 2010-17 is effective for us in fiscal 2012 and should be applied prospectively.
Early adoption is permitted. If we were to adopt ASU 2010-17 prior to the first quarter of fiscal 2012, we must apply it retrospectively to the beginning of the
fiscal year of adoption and to all interim periods presented. We are currently evaluating the impact of the pending adoption of ASU 2010-17 on our consolidated
financial statements.
Disclosure Requirements Related to Fair Value Measurements: In January 2010, the FASB issued Accounting Standards Update No. 2010-06, Improving
Disclosures about Fair Value Measurements (Topic 820)—Fair Value Measurements and Disclosures (ASU 2010-06), to add additional disclosures about the
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Source: ORACLE CORP, 10-K, July 01, 2010 Powered by Morningstar® Document Research℠