Estee Lauder 2009 Annual Report Download - page 129

128 THE EST{E LAUDER COMPANIES INC.
intangible assets acquired after the effective date. The
disclosure requirements must be applied prospectively to
all intangible assets recognized as of the effective date.
In December 2007, the FASB issued SFAS No. 141(R).
SFAS No. 141(R) replaces SFAS No. 141, “Business
Combinations,” however, it retains the fundamental
requirements of the former Statement that the acquisition
method of accounting (previously referred to as the pur-
chase method) be used for all business combinations and
for an acquirer to be identifi ed for each business combi-
nation. SFAS No. 141(R) defi nes the acquirer as the entity
that obtains control of one or more businesses in the busi-
ness combination and establishes the acquisition date as
the date that the acquirer achieves control. Among other
requirements, SFAS No. 141(R) requires the acquiring
entity in a business combination to recognize the identi-
fi able assets acquired, liabilities assumed and any non-
controlling interest in the acquiree at their acquisition-date
fair values, with limited exceptions; acquisition-related
costs generally will be expensed as incurred. SFAS
No. 141(R) requires certain fi nancial statement disclosures
to enable users to evaluate and understand the nature and
financial effects of the business combination. SFAS
No. 141(R) must be applied prospectively to business com-
binations that are consummated on or after July 1, 2009.
In December 2007, the FASB issued SFAS No. 160 to
establish accounting and reporting standards for the non-
controlling interest in a subsidiary and for the deconsoli-
dation of a subsidiary. Among other requirements, SFAS
No. 160 clarifi es that a noncontrolling interest in a subsid-
iary, which is sometimes referred to as minority interest, is
to be reported as a separate component of equity in the
consolidated fi nancial statements. SFAS No. 160 also
requires consolidated net income to include the amounts
attributable to both the parent and the noncontrolling
interest and to disclose those amounts on the face of the
consolidated statement of earnings. SFAS No. 160 must
be applied prospectively for fi scal years, and interim peri-
ods within those fi scal years, beginning in the Company’s
fi scal 2010, except for the presentation and disclosure
requirements, which will be applied retrospectively for all
periods presented.
In December 2007, the FASB ratifi ed the consensus
reached on EITF Issue No. 07-1, “Collaborative Arrange-
ments,” (“EITF No. 07-1”). This Issue addresses account-
ing for collaborative arrangement activities that are
conducted without the creation of a separate legal entity
for the arrangement. Revenues and costs incurred with
third parties in connection with the collaborative arrange-
ment should be presented gross or net by the collabora-
tors pursuant to the guidance in EITF Issue No. 99-19,
In November 2008, the FASB ratifi ed the consensus
reached on Emerging Issues Task Force (“EITF”) Issue No.
08-7, “Accounting for Defensive Intangible Assets” (“EITF
No. 08-7”). Defensive intangible assets are assets acquired
in a business combination that the acquirer (a) does not
intend to use or (b) intends to use in a way other than the
assets’ highest and best use as determined by an evalua-
tion of market participant assumptions. While defensive
intangible assets are not being actively used, they are
likely contributing to an increase in the value of other
assets owned by the acquiring entity. EITF No. 08-7 will
require defensive intangible assets to be accounted for as
separate units of accounting at the time of acquisition and
the useful life of such assets would be based on the period
over which the assets will directly or indirectly affect the
entity’s cash fl ows. This Issue would be applied prospec-
tively for defensive intangible assets acquired on or after
the beginning of the Company’s fi scal 2010, in order to
coincide with the effective date of SFAS No. 141 (revised
2007), “Business Combinations” (“SFAS No. 141(R)”).
In November 2008, the FASB ratifi ed the consensus
reached on EITF Issue No. 08-6, “Accounting for Equity
Method Investment Considerations” (“EITF No. 08-6”).
EITF No. 08-6 addresses questions about the potential
effect of SFAS No. 141(R) and SFAS No. 160, “Noncon-
trolling Interests in Consolidated Financial Statements—an
amendment of ARB No. 51” (“SFAS No. 160”) on equity-
method accounting. The primary issues include how the
initial carrying value of an equity method investment
should be determined, how to account for any subse-
quent purchases and sales of additional ownership inter-
ests, and whether the investor must separately assess its
underlying share of the investee’s indefi nite-lived intangible
assets for impairment. The effective date of EITF No. 08-6
coincides with that of SFAS No. 141(R) and SFAS No. 160
and is to be applied on a prospective basis beginning in
the Company’s fi scal 2010. Early adoption is not permit-
ted for entities that previously adopted an alternate
accounting policy.
In April 2008, the FASB issued FSP No. FAS 142-3,
“Determination of the Useful Life of Intangible Assets”
(“FSP No. FAS 142-3”). This FSP amends the factors that
should be considered in developing renewal or extension
assumptions used to determine the useful life of a recog-
nized intangible asset under SFAS No. 142, “Goodwill and
Other Intangible Assets” (“SFAS No. 142”). This FSP also
adds certain disclosures to those already prescribed in
SFAS No. 142. FSP No. FAS 142-3 becomes effective for
fi scal years, and interim periods within those fi scal years,
beginning in the Company’s fi scal 2010. The guidance for
determining useful lives must be applied prospectively to