Washington Post 2009 Annual Report Download - page 76

functional currency are translated into U.S. dollars using the current
rate method, whereby operating results are converted at the
average rate of exchange for the period, and assets and liabilities
are converted at the closing rates on the period end date. Gains
and losses on translation of these accounts and the Company’s
equity investment in its foreign affiliates are accumulated and
reported as a separate component of equity and other
comprehensive income. Gains and losses on foreign currency
transactions are recognized in the Consolidated Statements of
Income.
Equity-Based Compensation—The Company measures
compensation expense for awards settled in shares based on the
grant date fair value of the award. The Company measures
compensation expense for awards settled in cash, or that may be
settled in cash, based on the fair value at each reporting date. The
Company recognizes the expense over the requisite service period,
which is generally the vesting period of the award.
Earnings Per Share—Earnings per share is calculated under the
two-class method. Basic earnings per share is calculated using the
weighted average number of common shares outstanding during the
period. Diluted earnings per share is calculated similarly except that
the computation includes the dilutive effect of the assumed exercise
of options and restricted stock issuable under the Company’s stock
plans.
Comprehensive Income—Comprehensive income consists of net
income, foreign currency translation adjustments, the change in
unrealized gains (losses) on investments in marketable equity
securities and pension and other postretirement plan adjustments.
Recently Adopted and Issued Accounting Pronouncements—In
June 2009, the Financial Accounting Standards Board (“FASB”)
issued an Accounting Standards Update (“ASU”) that establishes the
FASB Accounting Standards Codification (“the Codification”) as the
official single source of authoritative GAAP. The Codification
superseded all existing accounting standards. All other accounting
guidance not included in the Codification will be considered
nonauthoritative. The Codification also includes all relevant
Securities and Exchange Commission (“SEC”) guidance organized
using the same topical structure in separate sections within the
Codification. Following the Codification, the Board will not issue
new standards in the form of Statements, FASB Staff Positions or
Emerging Issues Task Force Abstracts. Instead, it will issue ASUs that
will serve to update the Codification, provide background
information about the guidance and provide the basis for
conclusions on the changes to the Codification. The Codification
does not change GAAP, but it changes the way GAAP is organized
and presented. The Codification is effective for interim and annual
periods ending after September 15, 2009. The impact of the
Codification on the Company’s consolidated financial statements is
limited to disclosures.
In September 2006, the FASB issued new guidance that defines
fair value, establishes a framework for measuring fair value in
accordance with GAAP and expands disclosures about fair value
measurements. The guidance was effective for the Company at the
beginning of fiscal year 2008 for all financial assets and liabilities
and for nonfinancial assets and liabilities recognized or disclosed at
fair value in the Company’s consolidated financial statements on a
recurring basis (at least annually). The adoption of these provisions
did not have any impact on the Company’s consolidated financial
statements, as the Company’s existing fair value measurements were
consistent with the new guidance. The FASB deferred the effective
date of the fair value guidance for nonfinancial assets and liabilities
that are not remeasured at fair value on a recurring basis to fiscal
years beginning after November 15, 2008. The implementation of
the fair value guidance for nonfinancial assets and nonfinancial
liabilities at the beginning of the Company’s 2009 fiscal year did
not have a material impact on the Company’s consolidated
financial statements. See Note P for additional disclosures about fair
value measurements.
In December 2007, the FASB issued new guidance for business
combinations that requires that the acquisition method of accounting
be applied to all business combinations, which significantly
changes the accounting for certain aspects of business com-
binations. Under this guidance, an acquiring entity is required to
recognize all of the assets acquired and liabilities assumed in a
transaction at the acquisition-date fair value, with limited exceptions.
The guidance changes the accounting treatment for certain specific
acquisition-related items, including (i) expensing acquisition-related
costs as incurred; (ii) valuing noncontrolling interests at fair value at
the acquisition date and (iii) expensing restructuring costs associated
with an acquired business. The guidance also includes a substantial
number of new disclosure requirements. The guidance also amends
GAAP for income taxes such that adjustments made to valuation
allowances on deferred taxes and acquired tax contingencies
associated with acquisitions that closed prior to the effective date
of the new guidance would also apply the provisions included
in the guidance. The guidance did not have any impact on the
Company’s consolidated financial statements upon adoption at
the beginning of fiscal year 2009. The Company expects the
guidance to have an impact on its accounting for future business
combinations, but the effect is dependent upon acquisitions that are
made in the future.
In April 2009, the FASB issued guidance that amends and clarifies
GAAP for business combinations to address application issues
associated with initial recognition and measurement, subsequent
measurement and accounting, and disclosure of assets and
liabilities arising from contingencies in a business combination.
This guidance is effective for assets or liabilities arising from
contingencies in business combinations for which the acquisition
date is subsequent to the beginning of fiscal year 2009. This
guidance did not have any impact on the Company’s consolidated
financial statements upon adoption. The Company expects the
guidance to have an impact on its accounting for future business
combinations, but the effect is dependent upon the acquisitions that
are made in the future.
In December 2007, the FASB issued guidance that establishes new
accounting and reporting standards for the noncontrolling interest in
a subsidiary and for the deconsolidation of a subsidiary. It clarifies
that a noncontrolling interest in a subsidiary (minority interest) is an
ownership interest in the consolidated entity that should be reported
as equity in the consolidated financial statements and separate from
the parent company’s equity. Among other requirements, this
62 THE WASHINGTON POST COMPANY