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Berkshire Hathaway Inc – ‘10-K’ for 12/31/09 – ‘XML.R9’

On: Monday, 3/1/10, at 6:02am ET · For: 12/31/09 · Accession #: 1193125-10-43450 · File #: 1-14905

  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 3/01/10  Berkshire Hathaway Inc            10-K       12/31/09   51:6.2M                                   Donnelley … Solutions/FA

Annual Report — Form 10-K — Sect. 13 / 15(d) – SEA’34
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K        Annual Report                                       HTML   1.51M 
10: 10-K        PDF of the Form 10-K -- d10k1                        PDF    514K 
 2: EX-3.(I)    Articles of Incorporation/Organization or Bylaws    HTML     43K 
 4: EX-21       Subsidiaries List                                   HTML     50K 
 5: EX-23       Consent of Experts or Counsel                       HTML     17K 
 3: EX-12       Statement re: Computation of Ratios                 HTML     33K 
 6: EX-31.1     Certification -- §302 - SOA'02                      HTML     22K 
 7: EX-31.2     Certification -- §302 - SOA'02                      HTML     22K 
 8: EX-32.1     Certification -- §906 - SOA'02                      HTML     16K 
 9: EX-32.2     Certification -- §906 - SOA'02                      HTML     16K 
41: XML         IDEA XML File -- Definitions and References          XML     97K 
47: XML         IDEA XML File -- Filing Summary                      XML     81K 
45: XML.R1      Document Information                                 XML     39K 
46: XML.R2      Entity Information                                   XML    156K 
28: XML.R3      Consolidated Balance Sheets                          XML    395K 
33: XML.R4      Consolidated Statements of Earnings                  XML    441K 
39: XML.R5      Consolidated Statements of Earnings Parenthetical    XML     95K 
38: XML.R6      Consolidated Statements of Cash Flows                XML    479K 
50: XML.R7      Consolidated Statements of Changes in                XML    320K 
                Shareholders' Equity                                             
22: XML.R8      Consolidated Statements of Comprehensive Income      XML    147K 
37: XML.R9      Significant accounting policies and practices        XML     75K 
20: XML.R10     Significant business acquisitions                    XML     32K 
19: XML.R11     Acquisition of Burlington Northern Santa Fe          XML     33K 
                Corporation                                                      
27: XML.R12     Investments in fixed maturity securities             XML     75K 
43: XML.R13     Investments in equity securities                     XML     67K 
29: XML.R14     Other Investments                                    XML     64K 
30: XML.R15     Investment gains and losses                          XML     47K 
35: XML.R16     Receivables                                          XML     44K 
51: XML.R17     Inventories                                          XML     35K 
25: XML.R18     Goodwill                                             XML     34K 
17: XML.R19     Property, plant and equipment                        XML     55K 
32: XML.R20     Derivative contracts                                 XML     74K 
42: XML.R21     Supplemental cash flow information                   XML     42K 
23: XML.R22     Unpaid losses and loss adjustment expenses           XML     65K 
40: XML.R23     Notes payable and other borrowings                   XML     60K 
31: XML.R24     Income taxes                                         XML     87K 
49: XML.R25     Dividend restrictions - Insurance subsidiaries       XML     31K 
44: XML.R26     Fair value measurements                              XML    124K 
34: XML.R27     Common stock                                         XML     40K 
36: XML.R28     Pension plans                                        XML    101K 
18: XML.R29     Contingencies and Commitments                        XML     59K 
21: XML.R30     Business segment data                                XML    188K 
24: XML.R31     Quarterly Data                                       XML     50K 
26: XML.R32     Schedule I - Condensed Financial Information         XML    102K 
48: EXCEL       IDEA Workbook of Financial Reports (.xls)            XLS    163K 
11: EX-101.INS  XBRL Instance -- brka-20091231                       XML   1.20M 
13: EX-101.CAL  XBRL Calculations -- brka-20091231_cal               XML    120K 
14: EX-101.DEF  XBRL Definitions -- brka-20091231_def                XML    240K 
15: EX-101.LAB  XBRL Labels -- brka-20091231_lab                     XML    459K 
16: EX-101.PRE  XBRL Presentations -- brka-20091231_pre              XML    305K 
12: EX-101.SCH  XBRL Schema -- brka-20091231                         XSD     84K

‘XML.R9’ — Significant accounting policies and practices

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<table cellpadding="0" style="BORDER-COLLAPSE: collapse" cellspacing="0" border="0" width="100%"> <tr> <td valign="top" align="left" width="4%">(1)</td> <td valign="top" align="left">Significant accounting policies and practices </td></tr></table> <table cellpadding="0" cellspacing="0" style="BORDER-COLLAPSE: collapse" border="0" width="100%"> <tr> <td width="4%"> </td> <td valign="top" align="left" width="4%">(a)</td> <td valign="top" align="left">Nature of operations and basis of consolidation </td></tr></table> Berkshire Hathaway Inc. (“Berkshire”) is a holding company owning subsidiaries engaged in a number of diverse business activities, including property and casualty insurance and reinsurance, utilities and energy, finance, manufacturing, service and retailing. In these notes the terms “us,” “we,” or “our” refer to Berkshire and its consolidated subsidiaries. Further information regarding our reportable business segments is contained in Note 22. Significant business acquisitions completed over the past three years are discussed in Note 2. The accompanying Consolidated Financial Statements include the accounts of Berkshire consolidated with the accounts of all subsidiaries and affiliates in which we hold a controlling financial interest as of the financial statement date. Normally a controlling financial interest reflects ownership of a majority of the voting interests. Other factors considered in determining whether a controlling financial interest is held include whether we possess the authority to purchase or sell assets or make other operating decisions that significantly affect the entity’s results of operations and whether we bear a majority of the financial risk of the entity. Intercompany accounts and transactions have been eliminated. Certain amounts in prior year presentations have been reclassified to conform with the current year presentation. In 2009, the Financial Accounting Standards Board established the FASB Accounting Standards Codification ™ (the “Codification”) as the source of accounting principles generally accepted in the United States of America (“GAAP”) through the integration of then current accounting standards from several sources into a single source. The Codification did not affect the content or application of GAAP that was in effect and had no material impact on our Consolidated Financial Statements. In these notes, relevant accounting principles are identified by Accounting Standards Codification number or “ASC.” As of January 1, 2009, we adopted certain provisions of ASC 810 Consolidation which require that noncontrolling interests (formerly known as “minority interests”) be displayed in the balance sheet as a separate component of shareholders’ equity and that net earnings attributable to the noncontrolling interests be indentified and presented in the statement of earnings. In addition, changes in ownership interests where the parent retains a controlling interest are to be reported as transactions affecting shareholders’ equity. Previously such transactions were reportable as additional investment purchases (potentially resulting in recognition of additional other assets, including goodwill, or liabilities) or sales (potentially resulting in gains or losses). During 2009, we acquired certain noncontrolling interests in subsidiaries that resulted in a reduction to shareholders’ equity attributable to Berkshire of approximately $121 million. The reduction represents the excess of consideration paid over the previously recorded balance sheet carrying amount of the acquired noncontrolling (minority) interests. <table cellpadding="0" cellspacing="0" style="BORDER-COLLAPSE: collapse" border="0" width="100%"> <tr> <td width="4%"> </td> <td valign="top" align="left" width="4%">(b)</td> <td valign="top" align="left">Use of estimates in preparation of financial statements </td></tr></table> The preparation of our Consolidated Financial Statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. In particular, estimates of unpaid losses and loss adjustment expenses and related recoverables under reinsurance for property and casualty insurance are subject to considerable estimation error due to the inherent uncertainty in projecting ultimate claim amounts that will be settled over many years. In addition, estimates and assumptions associated with the amortization of deferred charges reinsurance assumed, determination of fair value of certain financial instruments and evaluation of goodwill for impairment requires considerable judgment. Actual results may differ from the estimates used in preparing our Consolidated Financial Statements. <table cellpadding="0" cellspacing="0" style="BORDER-COLLAPSE: collapse" border="0" width="100%"> <tr> <td width="4%"> </td> <td valign="top" align="left" width="4%">(c)</td> <td valign="top" align="left">Cash and cash equivalents </td></tr></table> Cash equivalents consist of funds invested in U.S. Treasury Bills, money market accounts, demand deposits and other investments with a maturity of three months or less when purchased. <table cellpadding="0" cellspacing="0" style="BORDER-COLLAPSE: collapse" border="0" width="100%"> <tr> <td width="4%"> </td> <td valign="top" align="left" width="4%">(d)</td> <td valign="top" align="left">Investments </td></tr></table> We determine the appropriate classification of investments in fixed maturity and equity securities at the acquisition date and re-evaluate the classification at each balance sheet date. Held-to-maturity investments are carried at amortized cost, reflecting the ability and intent to hold the securities to maturity. Trading investments are carried at fair value and include securities acquired with the intent to sell in the near term. All other securities are classified as available-for-sale and are carried at fair value with net unrealized gains or losses reported as a component of accumulated other comprehensive income. We utilize the equity method of accounting with respect to investments when we possess the ability to exercise significant influence, but not control, over the operating and financial policies of the investee. The ability to exercise significant influence is presumed when an investor possesses more than 20% of the voting interests of the investee. This presumption may be overcome based on specific facts and circumstances that demonstrate that the ability to exercise significant influence is restricted. We apply the equity method to investments in common stock and to other investments when such other investments possess substantially identical subordinated interests to common stock. In applying the equity method with respect to investments previously accounted for at cost or fair value, the carrying value of the investment is adjusted on a step-by-step basis as if the equity method had been applied from the time the investment was first acquired. In applying the equity method, we record our investment at cost and subsequently increase or decrease the carrying amount of investment by our proportionate share of the net earnings or losses and other comprehensive income of the investee. We record dividends or other equity distributions as reductions in the carrying value of the investment. In the event that net losses of the investee reduce the carrying amount to zero, additional net losses may be recorded if other investments in the investee are at-risk even if we have not committed to provide financial support to the investee. Such additional equity method losses, if any, are based upon the change in our claim on the investee’s book value. Investment gains and losses arise when investments are sold (as determined on a specific identification basis) or are other-than-temporarily impaired. If a decline in the value of an investment below cost is deemed other than temporary, the cost of the investment is written down to fair value, with a corresponding charge to earnings. Factors considered in judging whether an impairment is other than temporary include: the financial condition, business prospects and creditworthiness of the issuer, the length of time that fair value has been less than cost, the relative amount of the decline and our ability and intent to hold the investment until the fair value recovers. Effective April 1, 2009, the FASB amended the provisions of ASC 320 Investments – Debt and Equity Securities relating to the recognition, measurement and presentation for other-than-temporary impairments of debt securities and changed certain disclosure requirements. With respect to an investment in a debt security, an other-than-temporary impairment is recognized if the investor (a) intends to sell or expects to be required to sell the debt security before amortized cost is recovered or (b) does not expect to ultimately recover the amortized cost basis even if it does not intend to sell the security. Losses under (a) are recognized in earnings. Under (b) the credit loss component is recognized in earnings and any difference between fair value and the amortized cost basis net of the credit loss is reflected in other comprehensive income. The adoption of this amendment did not have a material impact on our Consolidated Financial Statements. <table cellpadding="0" cellspacing="0" style="BORDER-COLLAPSE: collapse" border="0" width="100%"> <tr> <td width="4%"> </td> <td valign="top" align="left" width="4%">(e)</td> <td valign="top" align="left">Loans and finance receivables </td></tr></table> Loans and finance receivables consist of commercial and consumer loans originated or purchased. Loans and finance receivables are stated at amortized cost based on our ability and intent to hold such loans and receivables to maturity and are net of allowances for uncollectible accounts. Amortized cost represents acquisition cost, plus or minus origination and commitment costs paid or fees received, which together with acquisition premiums or discounts are deferred and amortized as yield adjustments over the life of the loan. Allowances for estimated losses from uncollectible loans are recorded when it is probable that the counterparty will be unable to pay all amounts due according to the terms of the loan. Allowances are provided on aggregations of consumer loans with similar characteristics and terms based upon historical loss and recovery experience, delinquency rates and current economic conditions. Provisions for loan losses are charged to earnings. <table cellpadding="0" cellspacing="0" style="BORDER-COLLAPSE: collapse" border="0" width="100%"> <tr> <td width="4%"> </td> <td valign="top" align="left" width="4%">(f)</td> <td valign="top" align="left">Derivatives </td></tr></table> We carry derivative contracts at estimated fair value in the accompanying Consolidated Balance Sheets. Such balances reflect reductions permitted under master netting agreements with counterparties. The changes in fair value of derivative contracts that do not qualify as hedging instruments for financial reporting purposes are recorded in earnings as derivative gains/losses. Cash collateral received from or paid to counterparties to secure derivative contract assets or liabilities is included in other liabilities or assets of finance and financial products businesses. Securities received from counterparties as collateral are not recorded as assets and securities delivered to counterparties as collateral continue to be reflected as assets in our Consolidated Balance Sheets. <table cellpadding="0" cellspacing="0" style="BORDER-COLLAPSE: collapse" border="0" width="100%"> <tr> <td width="4%"> </td> <td valign="top" align="left" width="4%">(g)</td> <td valign="top" align="left">Fair value measurements </td></tr></table> As defined under GAAP, fair value is the price that would be received to sell an asset or paid to transfer a liability between market participants in the principal market or in the most advantageous market when no principal market exists. Market participants are assumed to be independent, knowledgeable, able and willing to transact an exchange and not under duress. Nonperformance or credit risk is considered in determining the fair value of liabilities. Considerable judgment may be required in interpreting market data used to develop the estimates of fair value. Accordingly, estimates of fair value presented herein are not necessarily indicative of the amounts that could be realized in a current or future market exchange. Effective April 1, 2009, the FASB amended ASC 820 Fair Value Measurements and Disclosures to clarify that adjustments to transaction prices or quoted market prices may be required in illiquid or disorderly markets in order to estimate fair value. This amendment prescribes no specific methodology for making adjustments to transaction prices or quoted prices but rather confirms that different valuation techniques may be appropriate under the circumstances to determine the value that would be received to sell an asset or paid to transfer a liability in an orderly transaction. In August 2009, the FASB issued Accounting Standards Update 2009-05, “Measuring Liabilities at Fair Value” (“ASU 2009-05”). ASU 2009-05 provides guidance on valuing a liability when a quoted price in an active market is not available and was effective October 1, 2009. The adoption of the amendment to ASC 820 and ASU 2009-05 did not have a material impact on our Consolidated Financial Statements. <table cellpadding="0" cellspacing="0" style="BORDER-COLLAPSE: collapse" border="0" width="100%"> <tr> <td width="4%"> </td> <td valign="top" align="left" width="4%">(h)</td> <td valign="top" align="left">Inventories </td></tr></table> Inventories consist of manufactured goods and purchased goods acquired for resale. Manufactured inventory costs include raw materials, direct and indirect labor and factory overhead. Inventories are stated at the lower of cost or market. As of December 31, 2009, approximately 40% of the total inventory cost was determined using the last-in-first-out (“LIFO”) method, 32% using the first-in-first-out (“FIFO”) method, with the remainder using the specific identification method or average cost methods. With respect to inventories carried at LIFO cost, the aggregate difference in value between LIFO cost and cost determined under FIFO methods was $661 million and $607 million as of December 31, 2009 and 2008, respectively. <table cellpadding="0" cellspacing="0" style="BORDER-COLLAPSE: collapse" border="0" width="100%"> <tr> <td width="4%"> </td> <td valign="top" align="left" width="4%">(i)</td> <td valign="top" align="left">Property, plant and equipment </td></tr></table> Additions to property, plant and equipment are recorded at cost. The cost of major additions and betterments are capitalized, while the cost of replacements, maintenance and repairs that do not improve or extend the useful lives of the related assets are expensed as incurred. Interest over the construction period is capitalized as a component of cost of constructed assets. In addition, the cost of constructed assets of certain of our regulated utility and energy subsidiaries that are subject to ASC 980 Regulated Operations also includes an equity allowance for funds used during construction. Also see Note 1(p). Depreciation is provided principally on the straight-line method over estimated useful lives. Depreciation of assets of certain regulated utility and energy subsidiaries is provided over recovery periods based on composite asset class lives as agreed to by regulators. We evaluate property, plant and equipment for impairment when events or changes in circumstances indicate that the carrying value of such assets may not be recoverable or the assets are being held for sale. Upon the occurrence of a triggering event, we review the asset to assess whether the estimated undiscounted cash flows expected from the use of the asset plus residual value from the ultimate disposal exceeds the carrying value of the asset. If the carrying value exceeds the estimated recoverable amounts, we write down the asset to the estimated present value of the expected future cash flows from use of the asset. Impairment losses are reflected in the Consolidated Statements of Earnings, except with respect to impairments of assets of certain domestic regulated utility and energy subsidiaries where impairment losses are offset by the establishment of a regulatory asset to the extent recovery in future rates is probable. <table cellpadding="0" style="BORDER-COLLAPSE: collapse" cellspacing="0" border="0" width="100%"> <tr> <td width="4%"> </td> <td valign="top" align="left" width="4%">(j)</td> <td valign="top" align="left">Goodwill </td></tr></table> Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in business acquisitions. We evaluate goodwill for impairment at least annually. Evaluating goodwill for impairment involves a two-step process. The first step is to estimate the fair value of the reporting unit. There are several methods of estimating a reporting unit’s fair value, including market quotations, asset and liability fair values and other valuation techniques, such as discounted projected future net earnings or net cash flows and multiples of earnings. If the carrying amount of a reporting unit, including goodwill, exceeds the estimated fair value, a second step is performed. Under the second step, the identifiable assets, including identifiable intangible assets, and liabilities of the reporting unit are estimated at fair value as of the current testing date. The excess of the estimated fair value of the reporting unit over the estimated fair value of net assets establishes the implied value of goodwill. The excess of the recorded goodwill over the implied value is charged to earnings as an impairment loss. A significant amount of judgment is required in estimating the fair value of the reporting unit and performing goodwill impairment tests. <table cellpadding="0" cellspacing="0" style="BORDER-COLLAPSE: collapse" border="0" width="100%"> <tr> <td width="4%"> </td> <td valign="top" align="left" width="4%">(k)</td> <td valign="top" align="left">Revenue recognition </td></tr></table> Insurance premiums for prospective property/casualty insurance and reinsurance and health reinsurance policies are earned in proportion to the level of protection provided. In most cases, premiums are recognized as revenues ratably over the term of the contract with unearned premiums computed on a monthly or daily pro rata basis. Premiums for retroactive reinsurance property/casualty policies are earned at the inception of the contracts. Premiums for life reinsurance contracts are earned when due. Premiums earned are stated net of amounts ceded to reinsurers. Premiums are estimated with respect to certain reinsurance contracts where reports from ceding companies for the period are not contractually due until after the balance sheet date. For contracts containing experience rating provisions, premiums are based upon estimated loss experience under the contract. Sales revenues derive from the sales of manufactured products and goods acquired for resale. Revenues from sales are recognized upon passage of title to the customer, which generally coincides with customer pickup, product delivery or acceptance, depending on terms of the sales arrangement. Service revenues are recognized as the services are performed. Services provided pursuant to a contract are either recognized over the contract period or upon completion of the elements specified in the contract depending on the terms of the contract. Revenues related to the sales of fractional ownership interests in aircraft are recognized ratably over the term of the related management services agreement as the transfer of ownership interest in the aircraft is inseparable from the management services agreement. Interest income from investments in bonds and loans is earned under the constant yield method and includes accrual of interest due under terms of the bond or loan agreement as well as amortization of acquisition premiums and accruable discounts. In determining the constant yield for mortgage-backed securities, anticipated counterparty prepayments are estimated and evaluated periodically. Dividends from equity securities are earned on the ex-dividend date. Operating revenue of utilities and energy businesses resulting from the distribution and sale of natural gas and electricity to customers is recognized when the service is rendered or the energy is delivered. Amounts recognized include unbilled as well as billed amounts. Rates charged are generally subject to federal and state regulation or established under contractual arrangements. When preliminary rates are permitted to be billed prior to final approval by the applicable regulator, certain revenue collected may be subject to refund and a liability for estimated refunds is accrued. <table cellpadding="0" cellspacing="0" style="BORDER-COLLAPSE: collapse" border="0" width="100%"> <tr> <td width="4%"> </td> <td valign="top" align="left" width="4%">(l)</td> <td valign="top" align="left">Losses and loss adjustment expenses </td></tr></table> Liabilities for unpaid losses and loss adjustment expenses represent estimated claim and claim settlement costs of property/casualty insurance and reinsurance contracts with respect to losses that have occurred as of the balance sheet date. The liabilities for losses and loss adjustment expenses are recorded at the estimated ultimate payment amounts, except that amounts arising from certain workers’ compensation reinsurance business are discounted as discussed below. Estimated ultimate payment amounts are based upon (1) individual case estimates, (2) reports of losses from policyholders and (3) estimates of incurred but not reported losses. Provisions for losses and loss adjustment expenses are charged to earnings after deducting amounts recovered and estimates of amounts recoverable under reinsurance contracts. Reinsurance contracts do not relieve the ceding company of its obligations to indemnify policyholders with respect to the underlying insurance and reinsurance contracts. The estimated liabilities of workers’ compensation claims assumed under certain reinsurance contracts are carried at discounted amounts. Discounted amounts are based upon an annual discount rate of 4.5% for claims arising prior to January 1, 2003 and 1% for claims arising thereafter, consistent with discount rates used under statutory accounting principles. The periodic discount accretion is included in earnings as a component of losses and loss adjustment expenses. <table cellpadding="0" cellspacing="0" style="BORDER-COLLAPSE: collapse" border="0" width="100%"> <tr> <td width="4%"> </td> <td valign="top" align="left" width="4%">(m)</td> <td valign="top" align="left">Deferred charges reinsurance assumed </td></tr></table> Estimated liabilities for claims and claim costs in excess of the consideration received with respect to retroactive property and casualty reinsurance contracts that provide for indemnification of insurance risk are established as deferred charges at inception of such contracts. Deferred charges are subsequently amortized using the interest method over the expected claim settlement periods. Changes to the estimated timing or amount of loss payments produce changes in periodic amortization. Such changes in estimates are determined retrospectively and are included in insurance losses and loss adjustment expenses in the period of the change. The unamortized balances of deferred charges reinsurance assumed were $3,957 million and $3,923 million at December 31, 2009 and 2008, respectively. <table cellpadding="0" cellspacing="0" style="BORDER-COLLAPSE: collapse" border="0" width="100%"> <tr> <td width="4%"> </td> <td valign="top" align="left" width="4%">(n)</td> <td valign="top" align="left">Insurance premium acquisition costs </td></tr></table> Costs that vary with and are related to the issuance of insurance policies are deferred, subject to ultimate recoverability, and are charged to underwriting expenses as the related premiums are earned. Acquisition costs consist of commissions, premium taxes, advertising and certain other costs. The recoverability of premium acquisition costs generally reflects anticipation of investment income. The unamortized balances of deferred premium acquisition costs are included in other assets and were $1,770 million and $1,698 million at December 31, 2009 and 2008, respectively. <table cellpadding="0" cellspacing="0" style="BORDER-COLLAPSE: collapse" border="0" width="100%"> <tr> <td width="4%"> </td> <td valign="top" align="left" width="4%">(p)</td> <td valign="top" align="left">Regulated utilities and energy businesses </td></tr></table> Certain domestic energy subsidiaries prepare their financial statements in accordance with ASC 980 Regulated Operations, reflecting the economic effects from the ability to recover certain costs from customers and the requirement to return revenues to customers in the future through the regulated rate-setting process. Accordingly, certain costs are deferred as regulatory assets and obligations are accrued as regulatory liabilities which will be amortized over various future periods. At December 31, 2009, the Consolidated Balance Sheet includes $2,093 million in regulatory assets and $1,603 million in regulatory liabilities. At December 31, 2008, the Consolidated Balance Sheet includes $2,156 million in regulatory assets and $1,506 million in regulatory liabilities. Regulatory assets and liabilities are components of other assets and other liabilities of utilities and energy businesses. Regulatory assets and liabilities are continually assessed for probable future inclusion in regulatory rates by considering factors such as applicable regulatory changes, recent rate orders received by other regulated entities and the status of any pending or potential legislation. If future inclusion in regulatory rates ceases to be probable, the amount no longer probable of inclusion in regulatory rates is charged to earnings, refunded to customers or reflected as an adjustment to rates. <table cellpadding="0" cellspacing="0" style="BORDER-COLLAPSE: collapse" border="0" width="100%"> <tr> <td width="4%"> </td> <td valign="top" align="left" width="4%">(q)</td> <td valign="top" align="left">Foreign currency </td></tr></table> The accounts of our foreign-based subsidiaries are measured in most instances using the local currency of the subsidiary as the functional currency. Revenues and expenses of these businesses are generally translated into U.S. Dollars at the average exchange rate for the period. Assets and liabilities are translated at the exchange rate as of the end of the reporting period. Gains or losses from translating the financial statements of foreign-based operations are included in shareholders’ equity as a component of accumulated other comprehensive income. Gains and losses arising from transactions denominated in a currency other than the functional currency of the entity that is party to the transaction are included in earnings. <table cellpadding="0" style="BORDER-COLLAPSE: collapse" cellspacing="0" border="0" width="100%"> <tr> <td width="4%"> </td> <td valign="top" align="left" width="4%">(r)</td> <td valign="top" align="left">Income taxes </td></tr></table> We file a consolidated federal income tax return in the United States. In addition, we also file income tax returns in state, local and foreign jurisdictions as applicable. Provisions for current income tax liabilities are calculated and accrued on income and expense amounts expected to be included in the income tax returns for the current year. Deferred income taxes are calculated under the liability method. Deferred income tax assets and liabilities are based on differences between the financial statement and tax basis of assets and liabilities at the current enacted tax rates. Changes in deferred income tax assets and liabilities that are associated with components of other comprehensive income are charged or credited directly to other comprehensive income. Otherwise, changes in deferred income tax assets and liabilities are included as a component of income tax expense. Changes in deferred income tax assets and liabilities attributable to changes in enacted tax rates are charged or credited to income tax expense in the period of enactment. Valuation allowances are established for certain deferred tax assets where realization is not likely. Assets and liabilities are established for uncertain tax positions taken or positions expected to be taken in income tax returns when such positions are judged to not meet the “more-likely-than-not” threshold based on the technical merits of the positions. Estimated interest and penalties related to uncertain tax positions are included as a component of income tax expense. <table cellpadding="0" cellspacing="0" style="BORDER-COLLAPSE: collapse" border="0" width="100%"> <tr> <td width="4%"> </td> <td valign="top" align="left" width="4%">(s)</td> <td valign="top" align="left">Subsequent events </td></tr></table> In May 2009, the FASB amended ASC 855 Subsequent Events to set forth general accounting and disclosure requirements for events that occur subsequent to the balance sheet date but before the company’s financial statements are issued. We have evaluated events that have occurred subsequent to December 31, 2009 as prescribed by the FASB. <table cellpadding="0" cellspacing="0" style="BORDER-COLLAPSE: collapse" border="0" width="100%"> <tr> <td width="4%"> </td> <td valign="top" align="left" width="4%">(t)</td> <td valign="top" align="left">Accounting pronouncements to be adopted in the future </td></tr></table> In June 2009, the FASB issued revised standards relating to securitizations and special-purpose entities. The guidance eliminates the concept of a qualifying special-purpose entity (“QSPE”) and the exemption for QSPE’s from previous consolidation guidance and also modifies the derecognition criteria for transfers of financial assets. The guidance includes new criteria for determining the primary beneficiary of variable interest entities and increases the frequency in which reassessments must be made to determine the primary beneficiary of such variable interest entities. The guidance also requires additional disclosures and is effective for financial statements issued for fiscal periods beginning after November 15, 2009. We are evaluating the impact these changes in accounting standards will have on our Consolidated Financial Statements. In January 2010, the FASB issued Accounting Standards Update 2010-06, “Improving Disclosures About Fair Value Measurements” (“ASU 2010-06”). ASU 2010-06 requires disclosing separately the amount of significant transfers in and out of the Level 1 and Level 2 categories and the reasons for the transfers and it requires that Level 3 purchases, sales, issuances and settlements activity be reported on a gross rather than a net basis. ASU 2010-06 also requires fair value measurement disclosures for each class of assets and liabilities and disclosures about valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements for Level 2 and Level 3 measurements. These disclosures are effective for fiscal periods beginning after December 15, 2009, except for the Level 3 gross reporting which is effective for fiscal periods beginning after December 15, 2010. We do not anticipate that the adoption of ASU 2010-06 will have a material impact on our Consolidated Financial Statements.

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6 Subsequent Filings that Reference this Filing

  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 9/08/10  SEC                               UPLOAD¶    10/16/17    1:46K  Berkshire Hathaway Inc.
 6/14/10  SEC                               UPLOAD¶    10/16/17    1:54K  Berkshire Hathaway Inc.
 6/14/10  SEC                               UPLOAD¶    10/16/17    1:55K  Berkshire Hathaway Inc.
 5/03/10  SEC                               UPLOAD¶    10/16/17    1:28K  Berkshire Hathaway Inc.
 4/07/10  SEC                               UPLOAD¶    10/16/17    1:30K  Berkshire Hathaway Inc.
 3/29/10  SEC                               UPLOAD¶    10/16/17    1:33K  Berkshire Hathaway Inc.

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Filing Submission 0001193125-10-043450 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Berkshire Hathaway Inc – ‘10-K’ for 12/31/09 – ‘XML.R9’

On: Monday, 3/1/10, at 6:02am ET · For: 12/31/09 · Accession #: 1193125-10-43450 · File #: 1-14905

Annual Report — Form 10-K — Sect. 13 / 15(d) – SEA’34Filing Table of Contents

‘XML.R9’ — Significant accounting policies and practices

This Financial Report is an XBRL XML File.

6 Subsequent Filings that Reference this Filing

Annual Report — Form 10-K — Sect. 13 / 15(d) – SEA’34
Filing Table of Contents