Southwest Airlines 2011 Annual Report Download - page 94

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forma disclosures to include the effects of the AirTran acquisition as if it had been consummated as of January 1,
2010. There are no non-recurring pro forma adjustments directly attributable to the business combination
included in the reported pro forma revenue and earnings. See Note 2.
On May 12, 2011, the FASB ratified ASU No. 2011-04, “Fair Value Measurement (Topic 820):
Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and
IFRS.” This ASU establishes a global standard for measuring amounts at fair value. This ASU will not have a
material effect on the Company’s financial position or results of operations, but will change the Company’s
disclosure policies for fair value. This ASU is effective for reporting periods (including interim periods)
beginning after December 15, 2011. The Company will adopt this ASU for the interim period ending March 31,
2012. Early adoption is not permissible, and this ASU must be applied prospectively.
On June 16, 2011, the FASB ratified ASU No. 2011-05, “Presentation of Comprehensive Income.” This
ASU eliminates the current option to report other comprehensive income and its components in the statement of
changes in equity. Upon adoption, other comprehensive income must be presented either in a single continuous
statement of comprehensive income or in two separate but consecutive statements. This ASU will not have a
material effect on the Company’s financial position or results of operations, but will change the Company’s
disclosure policies for other comprehensive income. This ASU is effective for fiscal years, and interim periods
within those years, beginning after December 15, 2011. This ASU must be applied retrospectively and early
adoption is permitted. The Company will adopt this ASU for the interim period ending March 31, 2012.
On September 15, 2011, the FASB ratified ASU No. 2011-08, “Intangibles-Goodwill and Other (Topic
350): Testing Goodwill for Impairment.” This ASU permits an entity to first assess qualitative factors to
determine whether it is more likely than not (a likelihood of more than 50 percent) that the fair value of a
reporting unit is less than its carrying amount. After assessing qualitative factors, if an entity determines that it is
not more likely than not that the fair value of the reporting unit is less than its carrying amount, no further testing
is necessary. If an entity determines that it is more likely than not that the fair value of the reporting unit is less
than its carrying value, then the traditional two-step goodwill impairment test must be performed. As a result of
the acquisition of AirTran on May 2, 2011, the Company recognized goodwill and performed its initial annual
impairment test as of October 1, 2011. This ASU is effective for annual and interim goodwill impairment tests
performed for fiscal years beginning after December 15, 2011. However, early adoption was permitted. Although
it did not adopt ASU No. 2011-08 during 2011, the Company will evaluate the standard when performing its
future goodwill impairment tests.
On December 16, 2011, the FASB ratified ASU No. 2011-11, “Disclosures about Offsetting Assets and
Liabilities.” The new disclosure requirements mandate that entities disclose both gross and net information about
instruments and transactions eligible for offset in the statement of financial position as well as instruments and
transactions subject to an agreement similar to a master netting arrangement. In addition, the standard requires
disclosure of collateral received and posted in connection with master netting agreements or similar
arrangements. This ASU is effective for fiscal years, and interim periods within those years, beginning on or after
January 1, 2013. This ASU will not have a material effect on the Company’s financial position or results of
operations, but will change the Company’s disclosure policies for financial derivative instruments. The Company
plans to adopt this ASU for the interim period ending March 31, 2013.
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