Oracle 2011 Annual Report Download - page 104

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ORACLE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
May 31, 2011
Included in our non-operating income (expense), net for fiscal 2010 was a foreign currency remeasurement loss
of $81 million resulting from the designation of our Venezuelan subsidiary as “highly inflationary” in accordance
with ASC 830, Foreign Currency Matters, and subsequent devaluation of the Venezuelan currency by the
Venezuelan government.
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.
A two-step approach is applied pursuant to ASC 740 in the recognition and measurement of 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
Presentation of Comprehensive Income: In June 2011, the FASB issued Accounting Standards Update
No. 2011-05, Comprehensive Income (Topic 220)—Presentation of Comprehensive Income (ASU 2011-05), to
require an entity to present the total of comprehensive income, the components of net income, and the
components of other comprehensive income either in a single continuous statement of comprehensive income or
in two separate but consecutive statements. ASU 2011-05 eliminates the option to present the components of
other comprehensive income as part of the statement of equity. ASU 2011-05 is effective for us in our first
quarter of fiscal 2013 and should be applied retrospectively. We are currently evaluating the impact of our
pending adoption of ASU 2011-05 on our consolidated financial statements.
Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements: In May 2011, the
FASB issued Accounting Standards Update No. 2011-04, Amendments to Achieve Common Fair Value
Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards (Topic
820)—Fair Value Measurement (ASU 2011-04), to provide a consistent definition of fair value and ensure that the
fair value measurement and disclosure requirements are similar between U.S. GAAP and International Financial
Reporting Standards. ASU 2011-04 changes certain fair value measurement principles and enhances the disclosure
requirements particularly for level 3 fair value measurements (as defined in Note 4 below). ASU 2011-04 is
effective for us in our fourth quarter of fiscal 2012 and should be applied prospectively. We are currently evaluating
the impact of our pending adoption of ASU 2011-04 on our consolidated financial statements.
Disclosure of Supplementary Pro Forma Information for Business Combinations: In December 2010, the
FASB issued Accounting Standards Update No. 2010-29, Disclosure of Supplementary Pro Forma Information
for Business Combinations (Topic 805)—Business Combinations (ASU 2010-29), to improve consistency in how
the pro forma disclosures are calculated. Additionally, ASU 2010-29 enhances the disclosure requirements and
requires description of the nature and amount of any material, nonrecurring pro forma adjustments directly
attributable to a business combination. ASU 2010-29 is effective for us in fiscal 2012 and should be applied
prospectively to business combinations for which the acquisition date is after the effective date. Early adoption is
permitted. We will adopt ASU 2010-29 in fiscal 2012 and do not believe it will have a material impact on our
consolidated financial statements.
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