Goldman Sachs 2009 Annual Report Download - page 101

Goldman Sachs 2009 Annual Report
99
Notes to Consolidated Financial Statements
recognized in the  nancial statements. The  rm reports
interest expense related to income tax matters in “Provision
for taxes” in the consolidated statements of earnings and
income tax penalties in “Other expenses” in the consolidated
statements of earnings.
Earnings Per Common Share (EPS)
Basic EPS is calculated by dividing net earnings applicable
to common shareholders by the weighted average number of
common shares outstanding. Common shares outstanding
includes common stock and RSUs for which no future service
is required as a condition to the delivery of the underlying
common stock. Diluted EPS includes the determinants of basic
EPS and, in addition, re ects the dilutive effect of the common
stock deliverable pursuant to stock warrants and options and
to RSUs for which future service is required as a condition
to the delivery of the underlying common stock. In the  rst
quarter of  scal 2009, the  rm adopted amended accounting
principles related to determining whether instruments
granted in share-based payment transactions are participating
securities. Accordingly, the  rm treats unvested share-based
payment awards that have non-forfeitable rights to dividends
or dividend equivalents as a separate class of securities in
calculating earnings per common share. See “— Recent
Accounting Developments” below for further information on
these amended principles.
Cash and Cash Equivalents
The  rm de nes cash equivalents as highly liquid overnight
deposits held in the ordinary course of business. As of
December2009 and November2008, “Cash and cash
equivalents” on the consolidated statements of  nancial
condition included $4.45billion and $5.60billion,
respectively, of cash and due from banks and $33.84billion
and $10.14billion, respectively, of interest-bearing deposits
with banks.
Recent Accounting Developments
FASB Accounting Standards Codi cation. In July 2009, the
FASB launched the FASB Accounting Standards Codi cation
(the Codi cation) as the single source of GAAP. While the
Codi cation did not change GAAP, it introduced a new
structure to the accounting literature and changed references
to accounting standards and other authoritative accounting
guidance. The Codi cation was effective for the  rm for
the third quarter of  scal 2009 and did not have an effect on the
 rm’s  nancial condition, results of operations or cash  ows.
Accounting for Income Tax Bene ts of Dividends on
Share-Based Payment Awards (ASC 718). In June 2007,
the FASB issued amended accounting principles related to
income tax bene ts of dividends on share-based payment
awards, which require that the tax bene t related to dividend
equivalents paid on RSUs, which are expected to vest, be
recorded as an increase to additional paid-in capital. The
 rm previously accounted for this tax bene t as a reduction
to income tax expense. These amended accounting principles
were applied prospectively for tax bene ts on dividend
equivalents declared beginning in the  rst quarter of  scal
2009. Adoption did not have a material effect on the  rm’s
 nancial condition, results of operations or cash  ows.
Accounting for Transfers of Financial Assets and Repurchase
Financing Transactions (ASC 860). In February 2008, the
FASB issued amended accounting principles related to
transfers of  nancial assets and repurchase  nancing
transactions. These amended principles require an initial
transfer of a  nancial asset and a repurchase  nancing that
was entered into contemporaneously or in contemplation of
the initial transfer to be evaluated as a linked transaction
(for purposes of determining whether a sale has occurred)
unless certain criteria are met, including that the transferred
asset must be readily obtainable in the marketplace. The
 rm adopted these amended accounting principles for new
transactions entered into after November2008. Adoption did
not have a material effect on the  rm’s  nancial condition,
results of operations or cash  ows.
Disclosures about Derivative Instruments and Hedging
Activities (ASC815). In March 2008, the FASB issued amended
principles related to disclosures about derivative instruments
and hedging activities, which were effective for the  rm
beginning in the one month ended December2008. Since
these amended principles require only additional disclosures
concerning derivatives and hedging activities, adoption did not
affect the  rm’s  nancial condition, results of operations or
cash  ows.