Shutterfly 2010 Annual Report Download - page 52

Effective January 1, 2009, we adopted an accounting standard which establishes accounting and reporting standards for the noncontrolling
interest in a subsidiary and for the deconsolidation of a subsidiary, as codified in ASC 810-10-60 (formerly SFAS No. 160,
Accounting and
Reporting on Non
-controlling Interest in Consolidated Financial Statements, an Amendment of ARB 51
). This accounting standard states that
accounting and reporting for minority interests are to be recharacterized as noncontrolling interests and classified as a component of equity. The
calculation of earnings per share continues to be based on income amounts attributable to the parent. The adoption of these accounting updates
did not have any impact on our consolidated financial statements.
Effective January 1, 2009, we adopted an accounting standard update regarding the determination of the useful life of intangible assets. As
codified in ASC 350-30-50 (formerly FSP No. 142-3, Determination of the Useful Life of Intangible Assets
), this update amends the factors
considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under intangibles
accounting. It also requires a consistent approach between the useful life of a recognized intangible asset under prior business combination
accounting and the period of expected cash flows used to measure the fair value of an asset under the new business combinations accounting (as
currently codified under ASC 850). The update also requires enhanced disclosures when an intangible asset’
s expected future cash flows are
affected by an entity’
s intent and/or ability to renew or extend the arrangement. The adoption of these accounting updates did not have any
impact on our consolidated financial statements.
Effective January 1, 2009, we adopted a new accounting standard update from the Emerging Issues Task Force (“EITF”)
consensus
regarding the accounting of defensive intangible assets. This update, as codified in ASC 350-30 (formerly EITF No. 08-7, A
ccounting for
Defensive Intangible Assets
), clarifies accounting for defensive intangible assets subsequent to initial measurement. It applies to acquired
intangible assets which an entity has no intention of actively using, or intends to discontinue use of, the intangible asset but holds it to prevent
others from obtaining access to it (i.e., a defensive intangible asset). Under this update, a consensus was reached that an acquired defensive asset
should be accounted for as a separate unit of accounting (i.e., an asset separate from other assets of the acquirer); and the useful life assigned to
an acquired defensive asset should be based on the period during which the asset would diminish in value. The adoption of these accounting
updates did not have any impact on our consolidated financial statements.
Effective April 1, 2009, we adopted a new accounting standard for subsequent events, as codified in ASC 855-
10 (formerly SFAS No. 165,
Subsequent Events
). The update modifies the names of the two types of subsequent events either as recognized subsequent events (previously
referred to in practice as Type I subsequent events) or non-
recognized subsequent events (previously referred to in practice as Type II subsequent
events). In addition, the standard modifies the definition of subsequent events to refer to events or transactions that occur after the balance sheet
date, but before the financial statements are issued (for public entities) or available to be issued (for nonpublic entities). It also requires the
disclosure of the date through which subsequent events have been evaluated. The update did not result in significant changes in the practice of
subsequent event disclosures, and therefore the adoption did not have any impact on our consolidated financial statements.
Effective April 1, 2009, we adopted three accounting standard updates which were intended to provide additional application guidance and
enhanced disclosures regarding fair value measurements and impairments of securities. They also provide additional guidelines for estimating
fair value in accordance with fair value accounting. The first update, as codified in ASC 820-10-65 (formerly FSP No. 157-4,
Determining Fair
Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not
Orderly
), provides additional guidelines for estimating fair value in accordance with fair value accounting. The second accounting update, as
codified in ASC 320-10-65 (formerly FSP No. 115-2, Recognition and Presentation of Other-Than-Temporary Impairments)
, changes
accounting requirements for other-than-temporary-
impairment (OTTI) for debt securities by replacing the current requirement that a holder have
the positive intent and ability to hold an impaired security to recovery in order to conclude an impairment was temporary with a requirement that
an entity conclude it does not intend to sell an impaired security and it will not be required to sell the security before the recovery of its
amortized cost basis. The third accounting update, as codified in ASC 825-10-65 (formerly Accounting Principles Board (“APB”)
Opinion
No. 28
-1, Interim Disclosures about Fair Value of Financial Instruments)
, increases the frequency of fair value disclosures. These updates were
effective for fiscal years and interim periods ended after June 15, 2009. The adoption of these accounting updates did not have any impact on our
consolidated financial statements.
Effective July 1, 2009, we adopted The “FASB Accounting Standards Codification”
and the Hierarchy of Generally Accepted Accounting
Principles (ASC 105), (formerly SFAS No. 168, The “FASB Accounting Standards Codification”
and the Hierarchy of Generally Accepted
Accounting Principles
). This standard establishes only two levels of U.S. generally accepted accounting principles (“GAAP”),
authoritative and
nonauthoritative. The Financial Accounting Standard Board (“FASB”) Accounting Standards Codification (the “Codification”)
became the
source of authoritative, nongovernmental GAAP, except for rules and interpretive releases of the SEC, which are sources of authoritative GAAP
for SEC registrants. All other non-grandfathered, non-
SEC accounting literature not included in the Codification became nonauthoritative. We
began using the new guidelines and numbering system prescribed by the Codification when referring to GAAP in the third quarter of fiscal 2009.
As the Codification was not intended to change or alter existing GAAP, it did not have any impact on our consolidated financial statements.
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