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Table of Contents
Pandora Media, Inc.
Notes to Consolidated Financial Statements - Continued
Net Loss Per Share
Basic net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period.
Diluted net loss per share is computed by giving effect to all potential shares of common stock, including stock options, convertible preferred stock
warrants, restricted stock units and redeemable convertible preferred stock, to the extent dilutive. Basic and diluted net loss per share was the same for each
period presented as the inclusion of all potential common shares outstanding would have been anti-dilutive.
Recently Issued Accounting Standards
In October 2009, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2009-13 regarding Accounting
Standard Codification ("ASC") Subtopic 605-25, Revenue Recognition – Multiple-element Arrangements. This ASU addresses criteria for separating the
consideration in multiple-element arrangements. ASU 2009-13 requires companies to allocate the overall consideration to each deliverable by using a BESP
of individual deliverables in the arrangement in the absence of VSOE or other TPE of the selling price. The changes under ASU 2009-13 are effective
prospectively for revenue arrangements entered into or materially modified subsequent to adoption. The Company adopted the changes under ASU 2009-13
effective February 1, 2011. Under the previous accounting guidance, the Company treated its multiple element arrangements as a single unit of accounting as
the Company generally did not have evidence of fair value for its undelivered elements. Under the new guidance, the Company uses BESP when neither
VSOE nor TPE are available. As a result, the Company is able to recognize the relative fair value of the elements as they are delivered, assuming other
revenue recognition criteria are met. As a result of implementing ASU 2009-13, the Company recognized $3.0 million as revenue in the fiscal year ended
January 31, 2012 that would have been deferred under the previous guidance for multiple element arrangements.
In May 2011, the FASB issued ASU 2011-04 regarding ASC Topic 820 "Fair Value Measurement." This ASU updates accounting guidance to
clarify how to measure fair value to align the guidance surrounding Fair Value Measurement within GAAP and International Financial Reporting Standards.
In addition, the ASU updates certain requirements for measuring fair value and for disclosure around fair value measurement. It does not require additional
fair value measurements and the ASU was not intended to establish valuation standards or affect valuation practices outside of financial reporting. This ASU
will be effective for the Company's fiscal year beginning February 1, 2012. Early adoption is not permitted. The adoption of this guidance is not expected to
have a material impact on the Company's financial statements.
In June 2011, the FASB issued ASU No. 2011-05, "Comprehensive Income (Topic 220): Presentation of Comprehensive Income". This ASU amends
the ASC to allow an entity the option to present the total of comprehensive income, the components of net income, and the components of other
comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices an
entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for
other comprehensive income, and a total amount for comprehensive income. ASU 2011-05 eliminates the option to present the components of other
comprehensive income as part of the statement of changes in stockholders' equity. The amendments to the ASC in the ASU do not change the items that must
be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. ASU 2011-05 is effective for
fiscal years, and interim periods within those years, beginning after December 15, 2011. Early adoption is permitted. The adoption of this guidance is not
expected to have a material impact on the Company's financial statements.
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