Rosetta Stone 2009 Annual Report Download - page 67

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Table of Contents
The operating lease obligations reflected in the table above include our corporate office leases and site licenses for our kiosks.
Recent Accounting Pronouncements
In February 2008, the FASB issued Accounting Standards Codification topic 820, Fair Value Measurements and Disclosures ("ASC 820"). The
provisions of ASC 820, which provide guidance for, among other things, the definition of fair value and the methods used to measure fair value, were adopted
January 1, 2008 for financial instruments. The provisions adopted in 2008 did not have an impact on the Company's financial statements. The effective date of
ASC 820 for all nonrecurring fair value measurements of nonfinancial assets and liabilities (except for those that are recognized or disclosed at fair value in
the financial statements on a recurring basis) was fiscal years beginning after November 15, 2008. On January 1, 2009 we adopted the provisions in ASC 820
for nonrecurring fair value measurements of nonfinancial assets and liabilities. We applied the provisions adopted in the first quarter of 2009 to the accounting
for the acquisition of SGLC International Co. Ltd. See note 4.
In December 2007, the FASB issued Accounting Standards Codification topic 805, Business Combinations ("ASC 805"), which establishes principles
and requirements for how an acquirer in a business combination recognizes and measures in its financial statements the identifiable assets acquired, the
liabilities assumed, and any noncontrolling interest; recognizes and measures the goodwill acquired in the business combination or a gain from a bargain
purchase; and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business
combination. ASC 805 is to be applied prospectively to business combinations for which the acquisition date is on or after an entity's fiscal year that begins
after December 15, 2008. We applied the provisions adopted in the first quarter of 2009 to the fair value measurements recorded as part of the acquisition of
SGLC International Co. Ltd. See note 4.
In December 2007, the FASB issued Accounting Standards Codification topic 810, Consolidation ("ASC 810"), which establishes new accounting and
reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. Specifically, this statement requires the
recognition of a noncontrolling interest (minority interest) as equity in the consolidated financial statements and separate from the parent's equity. The amount
of net income attributable to the noncontrolling interest will be included in consolidated net income on the face of the income statement. ASC 810 clarifies
that changes in a parent's ownership interest in a subsidiary that do not result in deconsolidation are equity transactions if the parent retains its controlling
financial interest. In addition, this statement requires that a parent recognize a gain or loss in net income when a subsidiary is deconsolidated. Such gain or
loss will be measured using the fair value of the noncontrolling equity investment on the deconsolidation date. ASC 810 also includes expanded disclosure
requirements regarding the interests of the parent and its noncontrolling interest. ASC 810 is effective for fiscal years, and interim periods within those fiscal
years, beginning on or after December 15, 2008. Earlier adoption is prohibited. The adoption of ASC 810 did not have a material impact on our financial
position, results of operations or cash flows.
In March 2008, the FASB issued Accounting Standards Codification topic 815, Derivatives and Hedging ("ASC 815"), which requires enhanced
disclosures about an entity's derivative and hedging activities. This Statement is effective for financial statements issued for fiscal years and interim periods
beginning after November 15, 2008. Entities are required to provide enhanced disclosures about (a) how and why an entity uses derivative instruments,
(b) how derivative instruments and related hedged items are accounted for and (c) how derivative instruments and related hedged items affect an entity's
financial position, financial performance and cash flows. The adoption of ASC 815 did not have a significant impact on our financial position, results of
operations or cash flows.
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