Callaway 2009 Annual Report Download - page 84

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Statements, FASB Staff Positions, or Emerging Issues Task Force Abstracts. Instead, the FASB will issue
Accounting Standards Updates, which will serve only to: (a) update the Codification; (b) provide background
information about the guidance; and (c) provide the bases for conclusions on the change(s) in the Codification.
As the Codification does not change U.S. GAAP, it does not have a material impact on the Company’s
consolidated condensed financial statements. Previous references made to U.S. GAAP literature in the notes to
the Company’s consolidated financial statements have been updated with references to the new Codification.
As of June 30, 2009, the Company adopted ASC Topic 855, “Subsequent Events” (“ASC Topic 855”). ASC
Topic 855 establishes general standards of accounting for and disclosure of events that occur after the balance
sheet date but before financial statements are issued or are available to be issued. Specifically, ASC Topic 855
provides (i) the period after the balance sheet date during which management of a reporting entity should
evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements;
(ii) the circumstances under which an entity should recognize events or transactions occurring after the balance
sheet date in its financial statements; and (iii) the disclosures that an entity should make about events or
transactions that occurred after the balance sheet date. ASC Topic 855 is effective for interim or annual financial
periods ending after June 15, 2009, and has been applied prospectively.
As of January 1, 2009, the Company adopted ASC Topic 810, “Consolidation” (“ASC Topic 810”). ASC
Topic 810 establishes 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 is an ownership
interest in the consolidated entity that should be reported as equity in the consolidated financial statements.
Additionally, ASC Topic 810 requires that consolidated net income include the amounts attributable to both the
parent and the noncontrolling interest. ASC Topic 810 is effective for interim periods beginning on or after
December 15, 2008. As a result of adopting the presentation requirements related to noncontrolling interests, the
Company has retrospectively adjusted its Condensed Consolidated Financial Statements. Adoption of the
accounting requirements for noncontrolling interests did not have a material impact on the Company’s results of
operations, financial position, or cash flows.
Recently Issued Accounting Standards
In December 2009, the FASB issued Accounting Standards Update No. 2009-17, “Improvements to
Financial Reporting by Enterprises Involved with Variable Interest Entities” (“ASU 2009-17”). ASU 2009-17
changes how a reporting entity determines when an entity that is insufficiently capitalized or is not controlled
through voting (or similar rights) should be consolidated. The determination of whether a reporting entity is
required to consolidate another entity is based on, among other things, the other entity’s purpose and design and
the reporting entity’s ability to direct the activities of the other entity that most significantly impact the other
entity’s economic performance. The new standard will require a number of new disclosures, including additional
disclosures about the reporting entity’s involvement with variable interest entities and any significant changes in
risk exposure due to that involvement. A reporting entity will be required to disclose how its involvement with a
variable interest entity affects the reporting entity’s financial statements. ASU 2009-17 will be effective at the
start of a reporting entity’s first fiscal year beginning after November 15, 2009, or January 1, 2010, for a calendar
year-end entity. Early application is not permitted. Based on the Company’s evaluation of ASU 2009-17, the
adoption of this statement will not have a material impact on the Company’s consolidated financial statements.
Revenue Recognition
Sales are recognized in accordance with ASC Topic 605, “Revenue Recognition,” as products are shipped to
customers, net of an allowance for sales returns and sales programs. The criteria for recognition of revenue is met
when persuasive evidence that an arrangement exists and both title and risk of loss have passed to the customer,
the price is fixed or determinable and collectability is reasonably assured. Sales returns are estimated based upon
historical returns, current economic trends, changes in customer demands and sell-through of products. The
Company also records estimated reductions to revenue for sales programs such as incentive offerings. Sales
F-8