Dell 2011 Annual Report Download - page 72

Table of Contents DELL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Stock-Based Compensation — Dell measures stock-based compensation expense for all share-based awards granted based on the estimated fair value of those
awards at grant date. The cost of restricted stock units and performance-based restricted stock units is determined using the fair market value of Dell's
common stock on the date of grant. Dell generally estimates the fair value of stock option awards using the Black-Scholes valuation model. The
compensation costs of stock options, restricted stock units, and awards with a cliff vesting feature are recognized net of any estimated forfeitures on a straight-
line basis over the employee requisite service period. Compensation cost for performance-based awards is recognized on a graded accelerated basis net of
estimated forfeitures over the requisite service period when achievement of the performance conditions are considered probable. Forfeiture rates are
estimated at grant date based on historical experience and adjusted in subsequent periods for differences in actual forfeitures from those estimates. See
Note 14 of the Notes to Consolidated Financial Statements included for further discussion of stock-based compensation.
Recently Issued Accounting Pronouncements
Credit Quality of Financing Receivables and the Allowance for Credit Losses — In July 2010, the FASB issued a new pronouncement that requires enhanced
disclosures regarding the nature of credit risk inherent in an entity's portfolio of financing receivables, how that risk is analyzed, and the changes and reasons
for those changes in the allowance for credit losses. These new disclosures require information for both the financing receivables and the related allowance for
credit losses at more disaggregated levels. Disclosures related to information as of the end of a reporting period became effective for Dell in Fiscal 2011.
Specific disclosures regarding activities that occur during a reporting period were required for Dell beginning in the first quarter of Fiscal 2012. As these
changes relate only to disclosures, they did not impact Dell's Consolidated Financial Statements.
Fair Value Measurements — In May 2011, the FASB issued new guidance on fair value measurements, which clarifies how a principal market is determined,
how and when the valuation premise of highest and best use applies, and how premiums and discounts are applied, as well as requiring new disclosures. This
new guidance is effective for Dell for the fiscal year ending February 1, 2013. Early application is not permitted. Other than requiring additional disclosures,
Dell does not expect that this new guidance will impact Dell's Consolidated Financial Statements.
Comprehensive Income — In June 2011, the FASB issued new guidance on presentation of comprehensive income. The new guidance eliminates the option
to present components of other comprehensive income as part of the statement of changes in stockholders' equity and requires an entity to present either one
continuous statement of net income and other comprehensive income or two separate, but consecutive statements. This new guidance relates only to
presentation. Dell will present a separate statement of comprehensive income beginning in the first quarter of the fiscal year ending February 1, 2013.
Intangibles- Goodwill and Other — In September 2011, the FASB issued new guidance that will simplify how entities test goodwill for impairment. After
assessment of certain qualitative factors, if it is determined to be more likely than not that the fair value of a reporting unit is less than its carrying amount,
entities must perform a quantitative analysis of the goodwill impairment test. Otherwise, the quantitative test becomes optional. This new guidance is effective
for Dell for the first quarter of the fiscal year ending February 1, 2013. Early adoption is permitted. Dell does not expect that this new guidance will impact
Dell's Consolidated Financial Statements.
Disclosures about Offsetting Assets and Liabilities — In December 2011, the FASB issued new guidance that will enhance disclosure requirements about the
nature of an entity’s right to offset and related arrangements associated with its financial instruments and derivative instruments. This new guidance requires
the disclosure of the gross amounts subject to rights of offset, amounts offset in accordance with the accounting standards followed, and the related net
exposure. This new guidance will be effective for Dell for the first quarter of the fiscal year ending January 31, 2014. Early adoption is not permitted. Other
than requiring additional disclosures, Dell does not expect that this new guidance will impact Dell's Consolidated Financial Statements.
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