Oracle 2014 Annual Report Download - page 107

Table of Contents
ORACLE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
May 31, 2015
Non-Operating Income (Expense), net
Non
-operating income (expense), net consists primarily of interest income, net foreign currency exchange gains (losses), the noncontrolling
interests in the net profits of our majority-owned subsidiaries (primarily Oracle Financial Services Software Limited and Oracle Japan) and net
other income (losses), including net realized gains and 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.
Included in foreign currency losses, net for fiscal 2015 were foreign currency remeasurement losses of $23 million, related to our Venezuelan
subsidiary due to the continued “highly inflationary” designation of the Venezuelan economy in accordance with ASC 830, Foreign Currency
Matters
; the introduction of currency exchange legislation in Venezuela in February 2015 to create a new foreign exchange mechanism known
as SIMADI; and the remeasurement of certain assets and liabilities of our Venezuelan subsidiary pursuant to the SIMADI rate, which we
determined, based upon our specific facts and circumstances, was the most appropriate for the reporting of our Venezuelan subsidiary’s Bolivar
based transactions and net monetary assets in U.S. Dollars. We incurred losses related to our Venezuelan subsidiary of $213 million and $64
million during fiscal 2014 and 2013, respectively, for generally similar reasons.
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
Cloud Computing Arrangements that Include a Software Element: In April 2015, the FASB issued ASU 2015-05, Intangibles—Goodwill
and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement (ASU 2015-
05) . ASU 2015-05 provides guidance to customers about whether a cloud computing arrangement includes software. If a cloud computing
arrangement includes a software license, the customer should account for the software license element of the arrangement
103
Year Ended May 31,
(in millions)
2015
2014
2013
Interest income
$
349
$
263
$
237
Foreign currency losses, net
(157
)
(375
)
(162
)
Noncontrolling interests in income
(113
)
(98
)
(112
)
Other income, net
27
69
48
Total non
-
operating income (expense), net
$
106
$
(141
)
$
11