Rayovac 2009 Annual Report Download - page 82

Table of Contents
Index to Financial Statements
Loss Contingencies
Loss contingencies are recorded as liabilities when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated.
The outcome of existing litigation, the impact of environmental matters and pending or potential examinations by various taxing authorities are examples of
situations evaluated as loss contingencies. Estimating the probability and magnitude of losses is often dependent upon management’s judgment of potential
actions by third parties and regulators. It is possible that changes in estimates or an increased probability of an unfavorable outcome could materially affect
future results of operations.
See further discussion in Item 3, Legal Proceedings, and Note 13, Commitments and Contingencies, of Notes to the Consolidated Financial
Statements included in this Annual Report on Form 10−K.
Other Significant Accounting Policies
Other significant accounting policies, primarily those with lower levels of uncertainty than those discussed above, are also critical to understanding
the Consolidated Financial Statements included in this Annual Report on Form 10−K. The Notes to the Consolidated Financial Statements included in this
Annual Report on Form 10−K contain additional information related to our accounting policies and should be read in conjunction with this discussion.
Recently Issued Accounting Standards
Business Combinations
In December 2007, the FASB issued new accounting guidance on business combinations and non−controlling interests in consolidated financial
statements. The objective is to improve the relevance, representational faithfulness and comparability of the information that a reporting entity provides in
its financial reports about a business combination and its effects. The guidance applies to all transactions or other events in which an entity (the “acquirer”)
obtains control of one or more businesses (the “acquiree”), including those sometimes referred to as “true mergers” or “mergers of equals” and
combinations achieved without the transfer of consideration. In April 2009, the FASB issued additional guidance which addresses application issues arising
from contingencies in a business combination. The new guidance is effective for our financial statements for the fiscal year that began October 1, 2009. We
will adopt the new guidance prospectively as applicable.
Noncontrolling Interests in Consolidated Financial Statements
In December 2007, the FASB issued new accounting and reporting standards for the noncontrolling interest in a subsidiary and for the
deconsolidation of a subsidiary. The new guidance also changes the way the consolidated financial statements are presented, establishes a single method of
accounting for changes in a parent’s ownership interest in a subsidiary that do not result in deconsolidation, requires that a parent recognize a gain or loss in
net income when a subsidiary is deconsolidated and expands disclosures in the consolidated financial statements that clearly identify and distinguish
between the parent’s ownership interest and the interest of the noncontrolling owners of a subsidiary. The provisions are to be applied prospectively as of
the beginning of the fiscal year in which the guidance is adopted, except for the presentation and disclosure requirements, which are to be applied
retrospectively for all periods presented. The new guidance is effective for our financial statements for the fiscal year that began October 1, 2009. We are in
the process of evaluating the impact that the guidance may have on our financial statements and related disclosures.
Determination of the Useful Life of Intangible Assets
In April 2008, the FASB issued new accounting guidance which amends the list of factors an entity should consider in developing renewal or
extension assumptions used in determining the useful life of recognized intangible assets. The new guidance applies to: (a) intangible assets that are
acquired individually or with a group of other assets and (b) intangible assets acquired in both business combinations and asset acquisitions. Entities
estimating the useful life of a recognized intangible asset must consider their historical experience in renewing or
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