Symantec 2011 Annual Report Download - page 146

Recently Issued and Adopted Authoritative Guidance
In the first quarter of fiscal 2011, we adopted new authoritative guidance which changes the model for
determining whether an entity should consolidate a variable interest entity (“VIE”). The standard replaces the
quantitative-based risks and rewards calculation for determining which enterprise has a controlling financial
interest in a VIE with an approach focused on identifying which enterprise has the power to direct the activities of a
VIE and the obligation to absorb losses of the entity or the right to receive the entity’s residual returns. The adoption
of this guidance did not have an impact on our consolidated financial statements for fiscal 2011.
In the fourth quarter of fiscal 2011, updated authoritative guidance was issued to modify Step 1 of the goodwill
impairment test for reporting units with zero or negative carrying amounts. For those reporting units, an entity is
required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment
exists. In determining whether it is more likely than not that a goodwill impairment exists, we will need to consider
whether there are any adverse qualitative factors indicating that an impairment may exist. The adoption of this
guidance will be effective beginning April 2, 2011, the first quarter of our fiscal 2012. The updated guidance may
require us to perform the step 2 for our Services reporting unit upon adoption. The adoption of this guidance could
potentially result in an impairment of the goodwill recorded in the Services reporting unit of up to $19 million.
Note 2. Fair Value Measurements
We measure assets and liabilities at fair value based on an expected exit price as defined by the authoritative
guidance on fair value measurements, which represents the amount that would be received on the sale of an asset or
paid to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair
value may be based on assumptions that market participants would use in pricing an asset or liability. The
authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on
either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical
level. The following are the hierarchical levels of inputs to measure fair value:
•Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active
markets.
•Level 2: Observable inputs that reflect quoted prices for identical assets or liabilities in markets that are not
active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are
observable for the assets or liabilities; or inputs that are derived principally from or corroborated by
observable market data by correlation or other means.
•Level 3: Unobservable inputs reflecting our own assumptions incorporated in valuation techniques used to
determine fair value. These assumptions are required to be consistent with market participant assumptions
that are reasonably available.
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Notes to Consolidated Financial Statements — (Continued)