Amgen 2009 Annual Report Download - page 129

AMGEN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
We evaluate whether an arrangement is a collaborative arrangement at its inception based on the facts and
circumstances specific to the arrangement. We re-evaluate whether an arrangement qualifies or continues to qual-
ify as a collaborative arrangement whenever there is a change in either the roles of the participants or the
participants’ exposure to significant risks and rewards dependent on the ultimate commercial success of the en-
deavor. For collaborative arrangements where it is determined that we are the principal participant, in accordance
with existing accounting rules, revenue generated and costs incurred with third parties are recorded on a gross
basis in our financial statements.
The adoption of this standard did not have a material impact on our consolidated results of operations, finan-
cial position or cash flows. See Note 7, “Collaborative arrangements.”
Fair value measurement
We adopted a new accounting standard that defines fair value and establishes a framework for fair value
measurements effective January 1, 2008 for financial assets and liabilities and effective January 1, 2009 for
non-financial assets and liabilities that are not remeasured on a recurring basis. Under this standard, fair value is
generally defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit
price”) in an orderly transaction between market participants at the measurement date. The adoption of this ac-
counting standard did not have a material impact on our consolidated results of operations, financial position or
cash flows.
Effective April 1, 2009, we adopted a new accounting standard that modifies the guidance used in determin-
ing whether the impairment of a debt security is other-than-temporary. Under this accounting standard, the
impairment of a debt security is considered other-than-temporary if an entity concludes that it intends to sell the
impaired security, that it is more likely than not it will be required to sell the security before the recovery of its
cost basis or that it does not otherwise expect to recover the cost basis of the security. This accounting standard
also amends the presentation requirements of other-than-temporarily impaired debt securities and expands dis-
closure requirements in the financial statements for investments in both debt and equity securities. The adoption
of this accounting standard did not have a material impact on our consolidated results of operations, financial po-
sition or cash flows.
Effective April 1, 2009, we adopted a new accounting standard that provides additional guidance in estimat-
ing fair value when the market volume and level of activity for an asset or liability have significantly decreased
and in identifying circumstances that indicate a transaction may not be orderly. The adoption of this accounting
standard did not have a material impact on our consolidated results of operations, financial position or cash
flows.
Effective October 1, 2009, we adopted a new accounting standard which clarifies guidance for determining
the fair value of a liability when a quoted price in an active market for an identical liability is not available. This
standard provides for the use of one or more valuation techniques, including quoted prices of identical or similar
liabilities when traded as assets, quoted prices of similar liabilities and other techniques consistent with the fair
value measurement framework, such as the amount an entity would pay to transfer the identical liability or would
receive to enter into the identical liability. The adoption of this standard did not have a material impact on our
consolidated results of operations, financial position or cash flows.
See Note 18, “Fair value measurement.”
Cash equivalents
We consider cash equivalents to be only those investments which are highly liquid, readily convertible to
cash and which mature within three months from date of purchase.
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