America Online 2014 Annual Report Download - page 94

AOL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
estimated. In situations where the Company can determine a best estimate within the range of potential loss, the
Company records the best estimate of the potential loss as a liability. In situations where the Company has
determined a range of loss, but no amount within the range is a better estimate than any other amount within the
range, the Company records the minimum amount of the range of loss as a liability.
Other Comprehensive Income (Loss)
Other comprehensive income (loss) is included within comprehensive income on the consolidated
statements of comprehensive income and stockholders’ equity on the consolidated balance sheets and consists of
net income (loss) and other gains and losses affecting equity that, under GAAP, are excluded from net income
(loss).
As of December 31, 2014, the Company’s net accumulated other comprehensive income balance
substantially consisted of foreign currency translation gains and losses.
Recently Adopted Accounting Standards
Accounting for Cumulative Translation Adjustments
In March 2013, new guidance was issued related to accounting for the cumulative translation adjustment
upon derecognition of certain subsidiaries or groups of assets within a foreign entity or of an investment in a
foreign entity. The new guidance clarifies that companies are required to apply the guidance in the foreign
currency accounting subtopic to release any related cumulative translation adjustment into net income. The
guidance also applies to step acquisitions.
The new guidance became effective for us in January 2014. The new guidance does not have a material
impact on the way the Company currently releases cumulative translation adjustments into net income upon
disposition or deconsolidation of a subsidiary.
Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss,
or a Tax Credit Carryforward Exists
In July 2013, new guidance was issued related to the presentation of an unrecognized tax benefit when a net
operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The objective of the new
guidance is to eliminate the diversity in financial statement reporting practices by requiring the netting of
unrecognized tax benefits against a deferred tax asset for a loss or other carryforward that would apply in
settlement of uncertain tax positions.
The new guidance became effective for the Company in January 2014 and resulted in the offsetting of
approximately $32.5 million of uncertain tax positions against deferred tax assets as of December 31, 2014.
NOTE 2—INCOME PER COMMON SHARE
Basic income per common share is calculated by dividing net income attributable to AOL common
stockholders by the weighted average number of shares of common stock outstanding during the reporting
period. Diluted income per common share is calculated to give effect to all potentially dilutive common shares
that were outstanding during the reporting period. The dilutive effect of outstanding equity-based compensation
awards is reflected in diluted income per common share by application of the treasury stock method, only in
periods in which such effect would have been dilutive for the period.
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