Microsoft 2009 Annual Report Download - page 48

PAGE 48
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SUBSEQUENT EVENTS
We evaluated events occurring between the end of our most recent fiscal year and July 29, 2009, the date the
financial statements were issued.
RECENTLY ISSUED ACCOUNTING STANDARDS
Recently Adopted Accounting Pronouncements
On April 1, 2009, we adopted the Financial Accounting Standards Board (“FASB”) Staff Positions (“FSP”) FAS 157-
4, FSP FAS 115-2 and FAS 124-2, and FSP FAS 107-1 and APB 28-1. These FSPs are intended to provide
additional application guidance and enhance disclosures about fair value measurements and impairments of
securities. FSP FAS 157-4 clarifies the objective and method of fair value measurement even when there has been
a significant decrease in market activity for the asset being measured. FSP FAS 115-2 and FAS 124-2 establishes a
new model for measuring other-than-temporary impairments for debt securities, including establishing criteria for
when to recognize a write-down through earnings versus other comprehensive income. FSP FAS 107-1 and APB
28-1 expands the fair value disclosures required for all financial instruments within the scope of SFAS No. 107,
Disclosures about Fair Value of Financial Instruments, to interim periods. Adoption of these FSPs did not have a
significant impact on our accounting for financial instruments but did expand our associated disclosures.
On January 1, 2009, we adopted Statement of Financial Accounting Standards (“SFAS”) No. 161, Disclosures
about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133. SFAS No. 161
requires additional disclosures about the Company’s objectives in using derivative instruments and hedging
activities, the method of accounting for such instruments under SFAS No. 133, Accounting for Derivative Instruments
and Hedging Activities, and its related interpretations, and tabular disclosures of the effects of such instruments and
related hedged items on our financial position, financial performance, and cash flows. See Note 5 – Derivatives.
On July 1, 2008, we adopted SFAS No. 157, Fair Value Measurements, for all financial assets and liabilities and
nonfinancial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a
recurring basis (at least annually). SFAS No. 157 defines fair value, establishes a framework for measuring fair value
in generally accepted accounting principles, and expands disclosures about fair value measurements. This
statement does not require any new fair value measurements, but provides guidance on how to measure fair value
by providing a fair value hierarchy used to classify the source of the information. See Note 4 – Investments.
SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities-Including an amendment of
FASB Statement No. 115, became effective for us on July 1, 2008. SFAS No. 159 gives us the irrevocable option to
elect fair value for the initial and subsequent measurement for certain financial assets and liabilities on a contract-by-
contract basis with the difference between the carrying value before election of the fair value option and the fair
value recorded upon election as an adjustment to beginning retained deficit. As of June 30, 2009, we had not
elected the fair value option for any eligible financial asset or liability.
Recent Accounting Pronouncements Not Yet Adopted
In June 2009, the FASB issued SFAS No. 167, Amendments to FASB Interpretation No. 46(R), which is effective for
us beginning July 1, 2010. This Statement amends Financial Accounting Standards Board Interpretation (“FIN”)
No. 46(R), Consolidation of Variable Interest Entities an interpretation of ARB No. 51, to require revised evaluations
of whether entities represent variable interest entities, ongoing assessments of control over such entities, and
additional disclosures for variable interests. We believe the adoption of this pronouncement will not have a material
impact on our financial statements.
In February 2008, the FASB issued FSP FAS 157-2, Effective Date of FASB Statement No. 157, which delays the
effective date of SFAS No. 157 for us to July 1, 2009, for all nonfinancial assets and nonfinancial liabilities, except
for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least
annually). We believe the adoption of the delayed items of SFAS No. 157 will not have a material impact on our
financial statements.