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Table of Contents
ORACLE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
May 31, 2015
If we cannot reasonably determine the fair value of a pre-acquisition contingency (non-income tax related) by the end of the measurement
period, which is generally the case given the nature of such matters, we will recognize an asset or a liability for such pre-acquisition contingency
if: (i) it is probable that an asset existed or a liability had been incurred at the acquisition date and (ii) the amount of the asset or liability can be
reasonably estimated. Subsequent to the measurement period, changes in our estimates of such contingencies will affect earnings and could have
a material effect on our results of operations and financial position.
In addition, uncertain tax positions and tax related valuation allowances assumed in connection with a business combination are initially
estimated as of the acquisition date. We reevaluate these items quarterly based upon facts and circumstances that existed as of the acquisition
date with any adjustments to our preliminary estimates being recorded to goodwill if identified within the measurement period. Subsequent to
the measurement period or our final determination of the tax allowance’s or contingency’s estimated value, whichever comes first, changes to
these uncertain tax positions and tax related valuation allowances will affect our provision for income taxes in our consolidated statement of
operations and could have a material impact on our results of operations and financial position.
Marketable and Non-Marketable Securities
In accordance with ASC 320, Investments — Debt and Equity Securities, and based on our intentions regarding these instruments, we classify
substantially all of our marketable debt and equity securities as available-for-sale. Marketable debt and equity securities classified as available-
for-sale are reported at fair value, with all unrealized gains (losses) reflected net of tax in stockholders’ equity on our consolidated balance
sheets, and as a line item in our consolidated statements of comprehensive income. If we determine that an investment has an other than
temporary decline in fair value, we recognize the investment loss in non-operating income (expense), net in the accompanying consolidated
statements of operations. We periodically evaluate our investments to determine if impairment charges are required. Substantially all of our
marketable debt and equity investments are classified as current based on the nature of the investments and their availability for use in current
operations.
We hold investments in certain non-marketable equity securities in which we do not have a controlling interest or significant influence. These
equity securities are recorded at cost and included in other assets in the accompanying consolidated balance sheets. If based on the terms of our
ownership of these non-marketable securities, we determine that we exercise significant influence on the entity to which these non-marketable
securities relate, we apply the requirements of ASC 323, Investments — Equity Method and Joint Ventures , to account for such investments .
Our non-marketable securities are subject to periodic impairment reviews.
Fair Values of Financial Instruments
We apply the provisions of ASC 820, Fair Value Measurement (ASC 820), to our assets and liabilities that we are required to measure at fair
value pursuant to other accounting standards, including our investments in marketable debt and equity securities and our derivative financial
instruments.
The additional disclosures regarding our fair value measurements are included in Note 4.
Allowances for Doubtful Accounts
We record allowances for doubtful accounts based upon a specific review of all significant outstanding invoices. For those invoices not
specifically reviewed, provisions are provided at differing rates, based upon the age of the receivable, the collection history associated with the
geographic region that the receivable was recorded in and current economic trends. We write-off a receivable and charge it against its recorded
allowance when we have exhausted our collection efforts without success.
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