Sears 2009 Annual Report Download - page 64

SEARS HOLDINGS CORPORATION
Notes to Consolidated Financial Statements—(Continued)
New Accounting Pronouncements
In June 2009, the Financial Accounting Standards Board, or FASB, issued the FASB Accounting Standards
Codification (“Codification”). Beginning in the third quarter of 2009, the Codification became the single source
for all authoritative generally accepted accounting principles, or GAAP, recognized by the FASB and is required
to be applied to financial statements issued for interim and annual periods ending after September 15, 2009. SEC
rules and interpretive releases also continue to be sources of authoritative GAAP for SEC registrants. The
Codification does not change GAAP and did not impact our results of operations, cash flows or financial
position.
Pension and Postretirement Benefit Plans
In December 2008, the FASB issued an update to accounting standards regarding employers’ disclosures
about postretirement benefit plan assets, which requires additional disclosures for pension and other
postretirement benefit plan assets. As pension and other postretirement benefit plan assets were not included
within the scope of new accounting standards previously issued on fair value, the update requires employers to
disclose information about fair value measurements of plan assets, including the investment policies and
strategies for the major categories of plan assets, and significant concentrations of risk within plan assets. The
accounting update is effective for fiscal years ending after December 15, 2009. As the update provides only
disclosure requirements, the adoption of this standard did not have a material impact on our results of operations,
cash flows or financial position. See Note 7 to the Consolidated Financial Statements disclosures regarding the
fair value of our pension assets.
Business Combinations
Effective February 1, 2009, we adopted a newly issued accounting standard for business combinations. The
new standard has a significant impact on the accounting for transaction costs and restructuring costs, as well as
the initial recognition of contingent assets and liabilities assumed during a business combination. The provisions
of the new standard are applied prospectively from the date of adoption, except for adjustments to valuation
allowances recorded on previously acquired entities’ deferred tax assets and uncertain tax position balances
occurring outside the measurement period, which are recorded as a component of income tax expense in the
period of adjustment, rather than goodwill. We expect this standard will have an impact on our consolidated
financial statements, but the nature and magnitude of the specific effects will depend upon the nature, terms and
size of the acquisitions we consummate after the effective date. As of January 30, 2010, we have recorded $38
million of unrecognized tax benefits and related interest, net of federal tax benefit, for tax positions of the
Predecessor Company and tax positions of acquired entities taken prior to their acquisition by Holdings.
Liabilities settled for different amounts will affect our income tax expense in the period of settlement or reversal.
Settlements recorded in fiscal 2009 did not have a material impact on our results of operations.
Noncontrolling Interests in Consolidated Financial Statements
Effective February 1, 2009, we adopted a newly issued accounting standard for noncontrolling interests. The
new standard governs the accounting for, and reporting of, noncontrolling interests in partially owned
consolidated subsidiaries and the loss of control of subsidiaries. The standard requires that: (1) noncontrolling
interest, previously referred to as minority interest, be reported as part of equity in the consolidated financial
statements; (2) losses be allocated to a noncontrolling interest even when such allocation might result in a deficit
balance, reducing the losses attributed to the controlling interest; (3) changes in ownership interests be treated as
equity transactions if control is maintained; (4) changes in ownership interests resulting in gain or loss be
recognized in earnings if control is gained or lost; and (5) in a business combination the noncontrolling interest’s
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