Xerox 2013 Annual Report Download - page 85

The following table summarizes certain significant costs and expenses that require management estimates for the
three years ended December 31, 2013:
Year Ended December 31,
Expense/(Income) 2013 2012 2011
Provisions for restructuring and asset impairments $ 116 $154 $ 32
Provisions for receivables 123 127 154
Provisions for litigation and regulatory matters (34) (1) 11
Provisions for obsolete and excess inventory 35 30 39
Provisions for product warranty liability 28 29 30
Depreciation and obsolescence of equipment on operating leases 283 279 294
Depreciation of buildings and equipment 431 452 405
Amortization of internal use software 147 116 91
Amortization of product software 43 19 11
Amortization of acquired intangible assets 332 328 401
Amortization of customer contract costs 122 107 49
Defined pension benefits - net periodic benefit cost(1) 267 300 177
Retiree health benefits - net periodic benefit cost 1 11 14
Income tax expense 276 272 377
______________
(1) 2011 includes $107 pre-tax curtailment gain - refer to Note 15 - Employee Benefit Plans for additional information.
Changes in Estimates
In the ordinary course of accounting for the items discussed above, we make changes in estimates as appropriate
and as we become aware of new or revised circumstances surrounding those estimates. Such changes and
refinements in estimation methodologies are reflected in reported results of operations in the period in which the
changes are made and, if material, their effects are disclosed in the Notes to the Consolidated Financial Statements
and in Management's Discussion and Analysis of Financial Condition and Results of Operations.
New Accounting Standards and Accounting Changes
Except for the Accounting Standard Updates (ASU's) discussed below, the new ASU's issued by the FASB during
the last two years did not have any significant impact on the Company.
Income Taxes
In July 2013, the FASB issued ASU 2013-11, Presentation of Unrecognized Tax Benefit When a Net Operating Loss
Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. This update provides guidance on the
financial statement presentation of unrecognized tax benefits when a net operating loss carryforward, a similar tax
loss, or a tax credit carryforward, exists. The guidance from this update is effective prospectively for our fiscal year
beginning January 1, 2014. Upon adoption of this standard, we expect to reclassify approximately $200 of liabilities
for unrecognized tax benefits against deferred tax assets.
Hedge Accounting
In July 2013, the FASB issued ASU 2013-10, Inclusion of the Fed Funds Effective Swap Rate (or Overnight Index
Swap Rate) as a Benchmark Interest Rate for Hedge Accounting Purposes. The update permits the Fed Funds
Effective Swap Rate to be used as a U.S. benchmark interest rate for hedge accounting purposes under FASB ASC
Topic 815, in addition to the interest rates on direct Treasury obligations of the U.S. government (UST) and the
London Interbank Offered Rate (LIBOR). The update also removes the restriction on using different benchmark
rates for similar hedges. ASU 2013-10 is effective prospectively for qualifying new or re-designated hedging
relationships entered into on or after July 17, 2013. The adoption of this standard did not have a material impact on
our financial condition or results of operations.
Cumulative Translation Adjustments
In March 2013, the FASB issued ASU 2013-05, Parent's Accounting for the Cumulative Translation Adjustment
upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a
Foreign Entity. The objective of ASU 2013-05 is to resolve the diversity in practice regarding the release into net
income of the cumulative translation adjustment upon derecognition of a subsidiary or group of assets within a
foreign entity. The guidance from this update is effective prospectively for our fiscal year beginning January 1, 2014.
Xerox 2013 Annual Report 68