Issue link: http://catalog.e-digitaleditions.com/i/114936
In 2012 the FASB issued ASU 2012-02, Testing Indefinite-Lived Intangible Assets for Impairment. This update amended the procedures for testing the impairment of indefinite-lived intangible assets by permitting an entity to first assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the indefinite-lived intangible assets are impaired. An entity���s assessment of the totality of events and circumstances and their impact on the entity���s indefinite-lived intangible assets will then be used as a basis for determining whether it is necessary to perform the quantitative impairment test as described in ASC 350-30, Intangibles ��� Goodwill and Other ��� General Intangibles Other than Goodwill. ASU 2012-02 is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012, with early adoption permitted. We do not expect this amendment to have a material effect on our Consolidated Financial Statements. Reclassifications: Certain prior year amounts have been reclassified to conform with the presentation used in 2012, primarily with respect to correct the classification of non-current deferred income taxes. NOTE 2 - FAIR VALUE MEASUREMENTS Accounting guidance on fair value measurements for certain financial assets and liabilities requires that financial assets and liabilities carried at fair value be classified and disclosed in one of the following three categories: Level 1: Quoted market prices in active markets for identical assets or liabilities. Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data. Level 3: Unobservable inputs reflecting the reporting entity's own assumptions or external inputs from active markets. When applying fair value principles in the valuation of assets and liabilities, we are required to maximize the use of quoted market prices and minimize the use of unobservable inputs. We calculate the fair value of our Level 1 and Level 2 instruments based on the exchange traded price of similar or identical instruments, where available, or based on other observable inputs. There were no significant transfers into or out of Level 1 or Level 2 that occurred between December 31, 2011 and December 31, 2012. The fair value of our Level 3 assets and liabilities are calculated as the net present value of expected cash flows based on externally provided or obtained inputs. Certain Level 3 assets may also be based on sale prices of similar assets. Our fair value calculations take into consideration our credit risk and that of our counterparties. Should a counterparty default, our maximum exposure to loss is the asset balance of the instrument. We did not change our valuation techniques used in measuring the fair value of any financial assets and liabilities during the year. Our valuation of our assets and liabilities measured at fair value: Total (Level 1) 2012 Assets: Cash and cash equivalents $ Available-for-sale marketable securities Corporate and asset-backed debt securities Foreign government debt securities United States agency debt securities Certificates of deposit Other Total available-for-sale marketable Trading marketable securities Foreign currency exchange contracts $ Liabilities: Deferred compensation arrangements $ Contingent consideration Foreign currency exchange contracts $ 2011 1,395 $ 905 1,280 848 288 114 360 2,890 57 3 4,345 $ 1,350 747 241 36 140 2,514 50 1 3,470 57 $ 103 1 161 $ 50 115 9 174 2012 (Level 2) 2011 2012 $ 1,395 $ 905 $ ��� ��� ��� ��� ��� ��� 57 ��� 1,452 $ ��� ��� ��� ��� ��� ��� 50 ��� 955 57 $ ��� ��� 57 $ 50 ��� ��� 50 $ $ (Level 3) 2011 2012 $ ��� $ ��� $ 1,280 848 288 114 360 2,890 ��� 3 2,893 $ 1,349 747 241 36 140 2,513 ��� 1 2,514 ��� $ ��� 1 1 $ ��� ��� 9 9 $ $ 2011 $ ��� $ ��� $ ��� ��� ��� ��� ��� ��� ��� ��� ��� $ 1 ��� ��� ��� ��� 1 ��� ��� 1 ��� $ 103 ��� 103 $ ��� 115 ��� 115 $ $ The following is a rollforward of our assets and liabilities measured at fair value using unobservable inputs (Level 3): Total 2012 Balance at the beginning of the period $ Transfers into Level 3 Transfers out of Level 3 Gains or (losses) included in earnings Sales Settlements Other Balance at the end of the period $ 29 (114) $ ��� ��� 6 (1) 39 (33) (103) $ 2011 (113) $ ��� (1) ��� ��� ��� ��� (114) $ Corporate and AssetBacked Debt Securities 2012 2011 1 $ ��� ��� ��� (1) ��� ��� ��� $ 1 ��� ��� ��� ��� ��� ��� 1 Foreign Government Debt Securities 2012 2011 $ $ ��� $ ��� ��� ��� ��� ��� ��� ��� $ Contingent Consideration 1 $ ��� (1) ��� ��� ��� ��� ��� $ 2012 (115) $ ��� ��� 6 ��� 39 (33) (103) $ 2011 (115) ��� ��� ��� ��� ��� ��� (115) Dollar amounts in millions except per share amounts or as otherwise specified