America Online 2009 Annual Report Download - page 81

Table of Contents
Recent Accounting Standards
Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities
On January 1, 2009, the Company adopted guidance that requires share-based compensation awards that qualify as participating securities to be
included in basic earnings per share using the two-class method. Under this guidance, all outstanding unvested share-based payment awards that contain rights
to nonforfeitable dividends or dividend equivalents are considered participating securities. The adoption of this guidance did not impact net income per
common share attributable to AOL for prior periods and is not expected to have an impact on future periods until such time as AOL declares a regular
quarterly dividend.
Fair Value Measurements
On January 1, 2009, the Company adopted guidance related to fair value measurements pertaining to non-financial assets and liabilities on a prospective
basis. This guidance establishes the authoritative definition of fair value, sets out a framework for measuring fair value and expands the required disclosures
about fair value measurement. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements.
The majority of the Company's non-financial assets, which include goodwill, intangible assets and property and equipment, are not required to be
carried at fair value on a recurring basis. However, if certain triggering events occur (or at least annually for goodwill) such that a non-financial asset is
required to be evaluated for impairment, a resulting asset impairment would require that the non-financial asset be recorded at the lower of historical cost or
fair value.
Business Combinations
On January 1, 2009, the Company adopted the guidance related to the accounting for business combinations, and is applying such provisions
prospectively to business combinations that have an acquisition date on or after January 1, 2009. This guidance establishes principles and requirements for
how an acquirer in a business combination (i) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and
any noncontrolling interest in the acquiree, (ii) recognizes and measures goodwill acquired in a business combination or a gain from a bargain purchase and
(iii) determines what information to disclose to enable users of financial statements to evaluate the nature and financial effects of the business combination. In
addition, changes in accounting for deferred tax asset valuation allowances and acquired income tax uncertainties after purchase accounting is completed will
be recognized in earnings rather than as an adjustment to the cost of an acquisition. This accounting treatment for deferred tax asset valuation allowances and
acquired income tax uncertainties is applicable to acquisitions that occurred both prior and subsequent to the adoption of this guidance. The adoption of this
guidance did not affect the Company's consolidated financial statements for prior periods.
Noncontrolling Interests
On January 1, 2009, the Company adopted guidance which establishes accounting and reporting standards for the noncontrolling interest in a
subsidiary, including the accounting treatment upon the deconsolidation of a subsidiary. This guidance is being applied prospectively, except for the
provisions related to the presentation of noncontrolling interests. Noncontrolling interests have been reclassified to equity in the consolidated balance sheet
and excluded from net income in the consolidated statement of operations for all prior periods presented.
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