Starwood 2009 Annual Report Download - page 138

periods beginning after November 15, 2008. The Company adopted this topic on January 1, 2009. See Note 22 for
enhanced disclosures associated with the adoption.
Effective January 1, 2008, the Company adopted SFAS No. 157 related to its financial assets and liabilities and
elected to defer the option of SFAS No. 157 for non-financial assets and non-financial liabilities as allowed by FSP
No. SFAS 157-2 “Effective Date of FASB Statement No. 157,” which was issued in February 2008, included in the
Codification as ASC 820, Fair Value Measurements and Disclosures. This topic defines fair value, establishes a
framework for measuring fair value under generally accepted accounting principles and enhances disclosures about
fair value measurements. Fair value is defined as the exchange price that would be received for an asset or paid to
transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly
transaction between market participants on the measurement date. Valuation techniques used to measure fair value
must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a
fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last
unobservable, that may be used to measure fair value as follows:
• Level 1 — Quoted prices in active markets for identical assets or liabilities.
• Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices
for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable
or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
• Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to
the fair value of the assets or liabilities.
On January 1, 2009, the Company adopted the provisions of this topic relating to non-financial assets and non-
financial liabilities. The adoption of this statement did not have a material impact on the Company’s consolidated
financial statements.
In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations”
(“SFAS 141(R)”), which is a revision of SFAS 141, “Business Combinations”, included in the Codification as
ASC 805-10-05-2. The primary requirements of this topic are as follows: (i.) Upon initially obtaining control, the
acquiring entity in a business combination must recognize 100% of the fair values of the acquired assets, including
goodwill, and assumed liabilities, with only limited exceptions even if the acquirer has not acquired 100% of its
target. As a consequence, the current step acquisition model will be eliminated. (ii.) Contingent consideration
arrangements will be fair valued at the acquisition date and included on that basis in the purchase price
consideration. The concept of recognizing contingent consideration at a later date when the amount of that
consideration is determinable beyond a reasonable doubt, will no longer be applicable. (iii.) All transaction costs
will be expensed as incurred. This topic is effective as of the beginning of an entity’s first fiscal year beginning after
December 15, 2008. The Company adopted this topic on January 1, 2009 and it did not have an impact on its
consolidated financial statements.
In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial
Statements — An Amendment of ARB No. 51, or SFAS No. 160” (“SFAS No. 160”), included in the Codification
as ASC 810-10-65-1. This topic establishes new accounting and reporting standards for the noncontrolling interest
in a subsidiary and for the deconsolidation of a subsidiary. Among other items, it requires that equity attributable to
noncontrolling interests be recognized in equity separate from that of the Company’s and that consolidated net
income now includes the results of operations attributable to noncontrolling interests. The Company adopted this
topic on January 1, 2009 and it did not have a material impact on the Company’s consolidated financial statements.
Future Adoption of Accounting Standards
In June 2009, the FASB issued SFAS No. 166, “Accounting for Transfers of Financial Assets, an Amendment
of FASB Statement No. 140” (“SFAS No. 166”), expected to be included in the Codification as ASC 860, Transfers
F-15
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)