Harman Kardon 2011 Annual Report Download - page 76

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Treasury Stock: We account for repurchased common stock under the cost method and include such
treasury stock as a component of our shareholder’s equity in our Consolidated Balance Sheets. Retirement of
treasury stock is recorded as a reduction of common stock and additional paid-in-capital in our Consolidated
Balance Sheets at the time such retirement is approved by our Board of Directors.
Recently Adopted Accounting Pronouncements
Variable Interest Entities: On July 1, 2010, we adopted the new accounting guidance issued by the
Financial Accounting Standards Board (“FASB”) within Accounting Standards Update (“ASU”) 2009-17,
“Consolidations (Topic 810): Improvements to Financial Reporting by Enterprises Involved with Variable
Interest Entities”, which amended certain provisions relating to the consolidation of variable interest entities
(“VIE”). The amended provisions primarily include (i) amending the guidance for determining whether an entity
is a VIE and (ii) amending the criteria for identification of the primary beneficiary of a VIE. The new provisions
also require us to continually reassess whether we are the primary beneficiary of a VIE and require that we
enhance our disclosures in the financial statements about our VIE relationships. The adoption of the new
guidance did not have any impact on our financial condition or results of operations.
Transfers of Financial Assets: On July 1, 2010, we adopted the new accounting guidance issued by the
FASB within ASU 2009-16, “Transfers and Servicing (Topic 860): Accounting for the Transfers of Financial
Assets” relating to the accounting for transfers of financial assets. The new guidance requires additional
disclosures relating to the transparency of transfers of financial assets. The adoption of the new guidance did not
have any impact on our financial condition or results of operations.
Multiple Element Revenue Arrangements: On July 1, 2010, we adopted the new accounting guidance
issued by the FASB within ASU 2009-13, “Revenue Recognition: (Topic 605): Multiple Deliverable Revenue
Arrangements—a consensus of the FASB Emerging Issues Task Force,” and ASU 2009-14, “Software (Topic
985): Certain Revenue Arrangements That Include Software Elements – a consensus of the FASB Emerging
Issues Task Force.” The new guidance requires a vendor to allocate revenue to each standalone deliverable in
arrangements involving multiple deliverables based on the relative selling price of each deliverable. It also
changes the level of evidence of the standalone selling price required to separate deliverables by allowing a
vendor to make its best estimate of the standalone selling price of deliverables when more objective evidence of
selling price is not available. The new guidance also excludes sales of tangible products that contain essential
software elements from the scope of revenue recognition for software arrangements. Because of these changes,
revenue is recognized earlier for many revenue transactions involving multiple deliverables and sales of software
enabled devices. The new guidance also requires additional disclosures relating to qualitative and quantitative
information about a vendor’s revenue arrangements and about the significant judgments made about the
application of the new guidance and any changes in those judgments or the application that may significantly
affect the timing or amount of revenue recognition. The new guidance can be adopted on a prospective basis or in
certain circumstances on a retrospective basis. We adopted the new guidance on a prospective basis and applied
the new guidance to all arrangements entered into or materially modified on or after July 1, 2010. The adoption
of the new guidance did not have a material impact on our financial condition or results of operations.
Recently Issued Accounting Standards
Intangibles, Goodwill and Other: In December 2010, the FASB issued ASU 2010-28, “Intangibles –
Goodwill and Other (Topic 350): When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units
with Zero or Negative Carrying Amounts.” The new guidance requires that reporting units with zero or negative
carrying amounts perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill
impairment exists. The new guidance is effective for us for fiscal years beginning after December 15, 2010. We
will adopt the provisions of this new guidance on July 1, 2011. We do not expect the adoption of the new
provisions to have any impact on our financial condition or results of operations.
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