EMC 2010 Annual Report Download - page 51

Table of Contents
EMC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. Summary of Significant Accounting Policies
Company
EMC Corporation ("EMC") and its subsidiaries develop, deliver and support the Information Technology ("IT") industry's broadest range of
information infrastructure and virtual infrastructure technologies, solutions and services.
EMC's Information Infrastructure business provides a foundation for organizations to store, manage, protect and secure their vast and ever-increasing
quantities of information, improve business agility, lower cost of ownership and enhance their competitive advantage within traditional data centers, virtual
data centers and cloud-based IT infrastructures. EMC's Information Infrastructure business comprises three segments – Information Storage, RSA Information
Security and Information Intelligence Group.
EMC's VMware Virtual Infrastructure business, which is represented by EMC's majority equity stake in VMware, Inc. ("VMware"), is the leading
provider of virtualization and cloud infrastructure software solutions.
Accounting Principles
The financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of
America ("GAAP").
Principles of Consolidation
These consolidated financial statements include the accounts of EMC, its wholly-owned subsidiaries and VMware, a company that is majority-owned
by EMC. All intercompany transactions have been eliminated.
EMC's interest in VMware was approximately 80% and 81% as of December 31, 2010 and 2009, respectively. VMware's financial results have been
consolidated with that of EMC for all periods presented as EMC is VMware's controlling stockholder. The portion of the results of operations of VMware
allocable to its other owners is shown as net income attributable to the non-controlling interest in VMware, Inc. on EMC's consolidated income statements.
Additionally, the cumulative portion of the results of operations of VMware allocable to its other owners, along with the interest in the net assets of VMware
attributable to those other owners, is shown as non-controlling interest in VMware, Inc. on EMC's consolidated balance sheets.
Use of Accounting Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, the reported amounts of revenues and expenses during the reporting period and the disclosure of contingent assets and
liabilities at the date of the financial statements. Actual results could differ from those estimates.
Revenue Recognition
We derive revenue from sales of information systems, software and services. We recognize revenue when persuasive evidence of an arrangement exists,
delivery has occurred, the sales price is fixed or determinable and collectability is reasonably assured. This policy is applicable to all sales, including sales to
resellers and end users. Product is considered delivered to the customer once it has been shipped or electronically delivered and risk of loss has been
transferred. For most of our product sales, these criteria are met at the time the product is shipped. The following summarizes the major terms of our
contractual relationships with our customers and the manner in which we account for sales transactions.
• Systems sales
Systems sales consist of the sale of hardware storage, required storage operating systems and hardware-related devices. Revenue for hardware is
generally recognized upon shipment.
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