Barnes and Noble 2010 Annual Report Download - page 28

Recent Accounting Pronouncements
In June 2009, the FASB issued ASC 105-10, The FASB
Accounting Standards Codification and the Hierarchy of
Generally Accepted Accounting Principles, a Replacement
of FASB Statement No. . The ASC identifies itself as the
source of authoritative accounting principles recognized
by the FASB to be applied by nongovernmental entities in
the preparation of financial statements in conformity with
generally accepted accounting principles in the United
States (GAAP). Rules and interpretive releases of the SEC
under authority of federal securities laws are also sources
of authoritative GAAP for SEC registrants. This statement
is effective for financial statements issued for interim
and annual periods ending after September 15, 2009. The
ASC does not change GAAP, but is intended to simplify
user access to all authoritative GAAP by providing all the
authoritative literature related to a particular topic in one
place. The FASB will not issue new standards in the form of
Statements, FASB Staff Positions or Emerging Issues Task
Force Abstracts. Instead, it will issue Accounting Standards
Updates (ASUs). The FASB will not consider ASUs as
authoritative in their own right. ASUs will only serve to
update the ASC, provide background information regard-
ing the guidance, and provide the basis for conclusions on
the change(s) in the ASC. Effective September 15, 2009, all
public filings of the Company reference the ASC as the sole
source of authoritative literature.
In April 2009, the FASB issued ASC 855-10-05, Subsequent
Events (ASC 855-10-05), which provides guidance to estab-
lish general standards of accounting for and disclosure of
events that occur after the balance sheet date but before
financial statements are issued. ASC 855-10-05 is effective
for interim and annual periods ending after June 15, 2009.
The Company adopted ASC 855-10-05 at May 3, 2009 and
the adoption had no impact on the Company’s financial
position, results of operations and cash flows.
In April 2009, the FASB issued ASC 825-10, Interim
Disclosures about Fair Value of Financial Instruments (ASC
825-10). ASC 825-10 amends ASC 825-10, Disclosures About
Fair Value of Financial Instruments, and requires disclo-
sures about fair value of financial instruments for interim
reporting periods of publicly traded companies as well as
in annual financial statements. ASC 825-10 also amends
ASC 270-10, Interim Financial Reporting, and requires those
disclosures in summarized financial information at interim
reporting periods. ASC 825-10 is effective for interim
reporting periods ending after June 15, 2009. The Company
adopted ASC 825-10 at May 3, 2009. The carrying amounts
of Cash and Cash Equivalents, Receivables and Accounts
Payable approximate fair value due to the short-term
maturities of these financial instruments. The Company
believes that its Credit Facility (see Note 3) approximates
fair value since interest rates are adjusted to reflect current
rates. The Company believes that the terms and conditions
of the Seller Notes (defined below) are consistent with
comparable market debt issues.
In October 2009, the FASB issued ASU No. 2009-13,
Multiple-Deliverable Revenue Arrangements—a Consensus of
the FASB Emerging Issues Task Force (ASU 2009-13). ASU
2009-13 updates the existing multiple-element revenue
arrangements guidance currently included under ASC
605-25, Revenue Arrangements with Multiple Deliverables.
The revised guidance addresses how to separate deliv-
erables, and how to measure and allocate arrangement
consideration. Vendors often provide multiple products or
services to customers. Because products and services are
often provided at different points in time or over different
time periods within the same contractual arrangement,
this guidance enables vendors to account for products or
services separately rather than as a combined unit.
In October 2009, the FASB issued ASU No. 2009-14,
Software (ASC 985) – Certain Revenue Arrangements That
Include Software Elements (ASU 2009-14). ASU 2009-14
amends the scope of software revenue guidance in ASC
985-605, Software-Revenue Recognition, affecting vendors
that sell or lease tangible products in an arrangement that
contains software that is more than incidental to the tan-
gible product as a whole. ASU No. 2009-14 does not affect
software revenue arrangements that do not include tangible
products. They also do not affect software revenue arrange-
ments that include services if the software is essential to
the functionality of those services.
ASU 2009-13 and ASU 2009-14 are effective prospectively
for revenue arrangements entered into or materially modi-
fied in fiscal years beginning on or after June 15, 2010, and
must be adopted in the same period using the same transi-
tion method. If adoption is elected in a period other than
the beginning of a fiscal year, the amendments in these
standards must be applied retrospectively to the beginning
of the fiscal year. Full retrospective application of these
amendments to prior fiscal years is optional. Early adop-
tion of these standards may be elected. The Company has
early adopted ASU 2009-13 and ASU 2009-14 at November
1, 2009. See Note 1 for the Company’s revenue recogni-
tion policy. Retrospective application does not apply to
the Company because the initial sales of products that
contain multiple elements were sold in the fiscal quarter of
adoption.
26 Barnes & Noble, Inc. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS continued