HP 2009 Annual Report Download - page 100

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 1: Summary of Significant Accounting Policies (Continued)
functional currency, and HP records the translation of their assets and liabilities into U.S. dollars at the
balance sheet dates as translation adjustments and includes them as a component of accumulated other
comprehensive loss.
Retirement and Post-Retirement Plans
HP has various defined benefit, other contributory and noncontributory retirement and
post-retirement plans. In addition, HP has assumed additional retirement and post-retirement plans in
connection with its acquisition of Electronic Data Systems Corporation (‘‘EDS’’) in August 2008. HP
generally amortizes unrecognized actuarial gains and losses on a straight-line basis over the remaining
estimated service life of participants. The measurement date for all HP plans is October 31 for fiscal
2009 and September 30 for fiscal 2008 except that the measurement date for EDS plans is October 31
for fiscal 2008. See Note 16 for a full description of these plans and the accounting and funding
policies, which is incorporated herein by reference.
Loss Contingencies
HP is involved in various lawsuits, claims, investigations and proceedings that arise in the ordinary
course of business. HP records a provision for a liability when it believes it is both probable that a
liability has been incurred and the amount can be reasonably estimated. Significant judgment is
required to determine both probability and the estimated amount. HP reviews these provisions at least
quarterly and adjusts these provisions to reflect the impact of negotiations, settlements, rulings, advice
of legal counsel, and updated information. Litigation is inherently unpredictable and is subject to
significant uncertainties, some of which are beyond HP’s control.
HP evaluated all subsequent events that occurred after the balance sheet date and through the
date and time its financial statements were issued on December 17, 2009.
Accounting Pronouncements
In September 2006, the FASB issued a new accounting standard related to fair value
measurements. The new standard defines fair value, establishes a framework for measuring fair value,
and expands disclosures about fair value measurements. In February 2008, the FASB issued a new
provision which delayed the effective date of the fair value measurements and disclosures for all
nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair
value in the financial statements on a recurring basis (at least annually). In August 2009, the FASB
issued Accounting Standards Update (‘‘ASU’’) No. 2009-05, ‘‘Measuring Liabilities at Fair Value’’ in
relation to the fair value measurement of liabilities. HP adopted the applicable portions of the
provisions of the new standards in the first and fourth quarters of fiscal 2009, and will adopt the
provision related to the nonfinancial assets and nonfinancial liabilities in the first quarter of fiscal 2010.
Although HP will continue to evaluate the application of the provision for the nonfinancial assets and
nonfinancial liabilities, HP does not expect the adoption to have a material impact on its consolidated
financial statements. See Note 9 for additional information pertaining to fair value measurements.
In December 2007, the FASB issued a new accounting standard related to business combinations.
The new standard expands the definition of a business and a business combination; requires recognition
of assets acquired, liabilities assumed, and contingent consideration at their fair value on the acquisition
date with subsequent changes recognized in earnings; requires acquisition-related expenses and
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