John Deere 2010 Annual Report Download - page 30

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Foreign Currency Translation
The functional currencies for most of the company’s foreign
operations are their respective local currencies. The assets and
liabilities of these operations are translated into U.S. dollars at
the end of the period exchange rates. The revenues and
expenses are translated at weighted-average rates for the period.
The gains or losses from these translations are recorded in
other comprehensive income. Gains or losses from transactions
denominated in a currency other than the functional currency
of the subsidiary involved and foreign exchange forward
contracts are included in net income. The pretax net losses for
foreign exchange in 2010, 2009 and 2008 were $75 million,
$68 million and $13 million, respectively.
3. NEW ACCOUNTING STANDARDS
New Accounting Standards Adopted
In the fi rst quarter of 2010, the company adopted Financial
Accounting Standard Board (FASB) Accounting Standards
Codifi cation (ASC) 810, Consolidation (FASB Statement
No. 160, Noncontrolling Interests in Consolidated Financial
Statements). ASC 810 requires that noncontrolling interests are
reported as a separate line in stockholders’ equity. The net
income for both Deere & Company and the noncontrolling
interests is included in “Net Income.” The “Net income (loss)
attributable to noncontrolling interests” is deducted from
“Net Income” to determine the “Net Income Attributable to
Deere & Company,” which will continue to be used to
determine earnings per share. ASC 810 also requires certain
prospective changes in accounting for noncontrolling interests
primarily related to increases and decreases in ownership and
changes in control. As required, the presentation and disclosure
requirements were adopted through retrospective application,
and the consolidated fi nancial statement prior period information
has been adjusted accordingly. The adoption did not have a
material effect on the company’s consolidated fi nancial
statements.
In the fi rst quarter of 2010, the company adopted FASB
ASC 805, Business Combinations (FASB Statement No. 141
(revised 2007), Business Combinations). ASC 805 requires an
acquirer to measure the identifi able assets acquired, the liabilities
assumed and any noncontrolling interest in the acquiree at their
fair values on the acquisition date, with goodwill being the excess
value over the net identifi able assets acquired. This standard also
requires the fair value measurement of certain other assets and
liabilities related to the acquisition such as contingencies and
research and development. The adoption did not have a material
effect on the company’s consolidated fi nancial statements.
In the fi rst quarter of 2010, the company adopted FASB
ASC 820, Fair Value Measurements and Disclosures (FASB
Statement No. 157, Fair Value Measurements), for nonrecurring
measurements of nonfi nancial assets and liabilities. The standard
requires that these measurements comply with certain guidance
for fair value measurements and the disclosure of such measure-
ments. The adoption did not have a material effect on the
company’s consolidated fi nancial statements.
In the fi rst quarter of 2010, the company adopted FASB
ASC 260, Earnings Per Share (FASB Staff Position (FSP)
Emerging Issues Task Force 03-6-1, Determining Whether
Instruments Granted in Share-Based Payment Transactions Are
Participating Securities). Based on this guidance, the company’s
nonvested restricted stock awards are considered participating
securities since they contain nonforfeitable dividend equivalent
rights. The diluted earnings per share are reported as the most
dilutive of either the two-class method or the treasury stock
method. This requires the company to compute earnings per
share on the two-class method. The adoption did not have
a material effect on the company’s consolidated fi nancial
statements (see Note 23).
In the fi rst quarter of 2010, the company adopted
FASB Accounting Standards Update (ASU) No. 2010-09,
Amendments to Certain Recognition and Disclosure
Requirements, which amends ASC 855, Subsequent Events.
This ASU removes the requirement for an SEC fi ler to disclose
a date through which subsequent events have been evaluated.
This change removes potential confl icts with SEC requirements.
The adoption did not have a material effect on the company’s
consolidated fi nancial statements.
In the second quarter of 2010, the company adopted
ASU No. 2010-06, Improving Disclosures about Fair Value
Measurements, which amends ASC 820, Fair Value
Measurements and Disclosures. This ASU requires disclosures
of transfers into and out of Levels 1 and 2, more detailed roll
forward reconciliations of Level 3 recurring fair value measure-
ments on a gross basis, fair value information by class of assets
and liabilities, and descriptions of valuation techniques and
inputs for Level 2 and 3 measurements. The effective date for
the roll forward reconciliations is the fi rst quarter of fi scal year
2012. The adoption in the second quarter this year did not have
a material effect and the future adoption will not have a material
effect on the company’s consolidated fi nancial statements.
At the end of the fourth quarter of 2010, the company
adopted FASB ASC 715, Compensation-Retirement Benefi ts
(FSP Financial Accounting Statement (FAS) 132(R)-1,
Employers’ Disclosures about Postretirement Benefi t Plan
Assets). ASC 715 requires additional disclosures relating to how
investment allocation decisions are made, the major categories of
plan assets, the inputs and valuation techniques used to measure
the fair value of plan assets, the levels within the fair value
hierarchy in which the measurements fall, a reconciliation of the
beginning and ending balances for Level 3 measurements, the
effect of fair value measurements using signifi cant unobservable
inputs on changes in plan assets for the period and signifi cant
concentrations of risk within plan assets. The adoption did not
have a material effect on the company’s consolidated fi nancial
statements.