Dow Chemical 2009 Annual Report Download - page 116

Table of Contents
The Dow Chemical Company and Subsidiaries
Notes to the Consolidated Financial Statements
Table of Contents
Note Page
ASummary of Significant Accounting Policies 84
BRecent Accounting Guidance 87
CRestructuring 90
DAcquisitions 98
EDivestitures 101
FInventories 103
GProperty 103
HNonconsolidated Affiliates and Related Company Transactions 104
IGoodwill and Other Intangible Assets 106
JFinancial Instruments 108
K Fair Value Measurements 114
LSupplementary Information 116
MEarnings Per Share Calculations 117
N Commitments and Contingent Liabilities 118
ONotes Payable, Long-Term Debt and Available Credit Facilities 126
PPension Plans and Other Postretirement Benefits 129
Q Leased Property 136
RVariable Interest Entities 136
S Stock-Based Compensation 137
T Limited Partnership 141
U Preferred Securities of Subsidiaries 141
VRedeemable Preferred Stocks 142
WStockholders’ Equity 142
XIncome Taxes 144
YOperating Segments and Geographic Areas 147
NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation and Basis of Presentation
The accompanying consolidated financial statements of The Dow Chemical Company and its subsidiaries (“Dow” or the “Company”) were prepared in
accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the assets, liabilities, revenues and
expenses of all majority-owned subsidiaries over which the Company exercises control and, when applicable, entities for which the Company has a controlling
financial interest or is the primary beneficiary. Intercompany transactions and balances are eliminated in consolidation. Investments in nonconsolidated
affiliates (20-50 percent owned companies, joint ventures and partnerships) are accounted for using the equity method.
Use of Estimates in Financial Statement Preparation
The preparation of financial statements in accordance with U.S. GAAP requires the use of estimates and assumptions that affect the reported amounts of
assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and
expenses during the reporting period. The Company’s consolidated financial statements include amounts that are based on management’s best estimates and
judgments. Actual results could differ from those estimates.
Foreign Currency Translation
The local currency has been primarily used as the functional currency throughout the world. Translation gains and losses of those operations that use local
currency as the functional currency are included in the consolidated balance sheets in “Accumulated other comprehensive income (loss)” (“AOCI”). Where the
U.S. dollar is used as the functional currency, foreign currency gains and losses are reflected in income.
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