usgaap overview

Introduction

What is US GAAP

Generally Accepted Accounting principles is a technical term in financial accounting. Generally accepted accounting principles encompass the conventions, rules and procedures necessary to define accepted accounting practice at a particular time. The standard of “generally accepted accounting principles” includes not only broad guidelines of general application, but also detailed practices and procedures.

Generally accepted accounting principles are conventional – that is, they become generally accepted by agreement (often tacit agreement) rather than by formal derivation from a set of postulates or basic concepts. The principles have developed on the basis of experience, reason, custom, usage and to a significant extent, practical necessity.

Accounting principles are usually directed towards solutions that are objective, conservative and verifiable. There are two broad categories of accounting principles:

Measurement

Disclosure

Measurement principles determine the timing and basis of items, which enter the accounting, cycle and impact the financial statements. These are quantitative standards, which require numerically precise answers to problems and activities subject to large amounts of uncertainty.

Disclosure principles deal with factors that are not always numerical. Such disclosures involve qualitative features that are essential ingredients of a full set of financial statements. Disclosure principles complement measurement standards by explaining these standards and giving other information on accounting policies, contingencies, uncertainties, etc., which are essential ingredients in the analytical process of accounting.

Financial statements are prepared and presented for external users by many enterprises around the world. Although such financial statements may appear similar from country to country, there are differences, which have probably been caused by a variety of social, economic and legal circumstances and by different countries having in mind the needs of different users of financial statements when setting national requirements.

These different circumstances have led to the use of a variety of definitions of the elements of financial statements; that is, for example, assets, liabilities, equity, income and expenses. They have also resulted in the use of different criteria for the recognition of items in the financial statements and in a preference for different bases of measurement. The scope of the financial statements and the disclosures made in them has also been affected. However, the basic accounting assumptions and concepts envisaged by the various accounting standards,

Whilst the International Accounting Standards Committee (IASC) is committed to narrowing these differences by seeking to harmonise regulations, accounting standards and procedures relating to the preparation and presentation of financial statements, countries round the world continue to follow the Accounting Standards issued by their local Accounting bodies.

Mandatory and Preferable GAAP

Category (A) specified by SAS 69 (discussed under Chapter III) constitutes mandatory GAAP. Any deviation from accounting principles specified by the designated rule-making body would require an auditor to either qualify the opinion or explain in the body of the report the reasons and effects of the departures. Independent auditors agree on the existence of generally accepted accounting principles, but the determination that a particular accounting principle is generally accepted may be difficult because no single reference source exists for all such principles.

Departures from positions given by publications in the second and third categories would require auditors to document and justify their conclusions. Although the positions constitute GAAP, they represent preferable viewpoints, not mandatory ones. Preferable accounting principles have historically been specialized principles of particular industries, which may not be transferable to other industries or to general business accounting policies.

1e page 1

Introduction

Certain preferable accounting principles in the past have become mandatory principles by the actions of the FASB. In Statement 32, the Board indicated that accounting principles and practices in certain AICPA Statements of Position and Accounting and Auditing Guides were preferable accounting principles. This recognition by the Board raised the status of these pronouncements which at that time

Materiality

Materiality as a concept has great significance in understanding, researching, and implementing GAAP. Each Statement of Financial Accounting Standards (SFAS) issued by the FASB concludes by stating that the provisions of the statement are not applicable to immaterial items.

Materiality is both a qualitative and quantitative concept. Certain events or transactions are material because of the nature of the item regardless of the dollar amounts involved. The enactment of prohibition outlawing the sale of most alcoholic beverages was a significant event to companies that produce and sell such products. Offers to buy or sell assets for more or less than book value, litigation proceedings against the company for price fixing or antitrust allegations, and active negotiations involving future profitability are all examples of items not capable of being evaluated for materiality based upon numerical calculations.

Quantitatively, materiality has been defined in many accounting standards. For example, in SFAS 131, Disclosures about Segments of an Enterprise and Related Information, a material segment or customer is defined as 10% or more of revenues.

The Securities and Exchange Commission has in several of its pronouncements defined materiality as 1% of total assets for receivables from officers and stockholders, 5% of total assets for separate balance sheet disclosure of items, and 10% of total revenues for disclosure of oil and gas producing activities.

Research of GAAP

The search for written GAAP consists primarily of analysis of the publications of various organizations concerned with accounting principles and practices. Accounting policies are established by these authorities in order to limit discretion and create uniformity, to the extent practical, for information and reporting purposes.

The FASB publishes two sets of books (both loose-leaf and bound), which can assist in researching accounting issues. The Current Text integrates all of the currently recognized standards in alphabetical order. The AICPA Research Bulletins, APB Opinions, and FASB Standards and Interpretations, and Emerging Issues Task Force Abstracts are combined in topical order. Supplemental guidance from the AICPA Accounting Interpretations and FASB Technical Bulletins are also incorporated. The materials have been edited down from the original pronouncements and may lack the clarity that can be obtained only from the unedited version. Descriptive material including reasons for conclusions are missing. Each paragraph in the current text is indexed back to the original pronouncement for research or follow-up referencing. The first volume of the Current Text deals with general standards while the second volume contains industry standards for specialized industries.

The Original Pronouncements contains all of the AICPA Accounting Research Bulletins, Interpretations and Terminology Bulletins, the APB Opinions, Statements and Interpretations, the FASB Standards, Interpretations, Concepts, Technical Bulletins, and Exposure Drafts. These are in two volumes in the order of their issuance. Paragraphs containing accounting principles that have been superseded or dropped are shaded in order to make the user aware. Such changes are identified in detail by a status page placed at the beginning of each pronouncement which can reference the user to other areas and pronouncements.

The Securities and Exchange Commission issues Staff Accounting Bulletins and makes rulings on individual cases that come before it, which create and impose accounting standards on those whose financial statements are submitted to the Commission. The SEC, through acts passed by Congress, has broad powers to pre scribe accounting practices and methods for all statements filed with it. Although it has usually preferred to encourage the development of standards in the private sector by deferring to the AICPA and FASB, the SEC has occasionally adopted policies that conflict with established standards. In each case, the result has been a veto b the SEC of the standard, as the AICPA or FASB has withdrawn or amended the standard to conform to SEC policy. Usually SEC disclosure standards require more information. However, the history of the SEC is one of cooperative assistance in the formulation of accounting standards. Congressional committees have bee

1e page 2

Introduction

critical of the SEC in instances where they felt that too much power was ceded to the profession itself without adequate oversight by the Commission.

1e page 3

Development of US GAAP

1920 - Widespread growth in the activities of the New York Stock Exchange

US GAAP is not governed by any Federal Companies Act. American Institute of Certified Public Accountants (AICPA) created a committee in 1930 to cooperate with the New York Stock Exchange in creating standards for accounting procedures. The widespread growth in the activities of the Exchange led to expanded ownership and trading activities by an underinformed public. This lack of information caused the accounting profession to become involved in the concept of Generally Accepted Accounting principles. This special committee recommended five rules to the Exchange, which later in 1938 was published as Accounting Research Bulletin (ARB 1) of the Committee on Accounting Procedure. The Committee published 51 such Bulletins, including Accounting Research Bulletin 43, which consolidated and restated Bulletins 1 – 41.

1950 – Formation of Accounting Principle Board

During the late 1950s, the Committee was substituted by the Accounting Principle Board (APB) to promulgate principles based primarily on the research of the Accounting Research Division. The Division was to undertake extensive research, publish the results, and allow the Board to lead the discussions, which would ensue concerning accounting principles and practices. The Board’s authority was enforced primarily through prestige and Rule 203 of the Code of Professional Ethics. However, approval by the Securities and Exchange Commission (SEC) of Board issuances gave additional support to its activities. During the entire time period of the accounting profession’s development of accounting principles, the SEC has often taken an active role, including its own pronouncements, where it feels the public interest demands action. The SEC has statutory authority to establish GAAP for publicly held entities, but has relied on the accounting profession for self-regulation.

During the 14 years of the Board, 31 opinions and 4 statements were issued. These dealt with amendments of Accounting Research Bulletins, opinions on the form and content of the financial statements, and issuance’s requiring changes in both the measurement and disclosure policies of the profession. However, the Board did not utilise the Accounting Research Division, which published 15 research studies during its lifetime. Both the Board and the Division acted independently in selecting topics for their respective agendas. The Board issued pronouncements in areas where little research had been done, and the division performed research studies without seeking to be all-inclusive or exhaustive in analysis.

1972 – Birth of Financial Accounting Board

Financial Accounting Standard Board (FASB) was formed in 1972. The Board consists of seven full time members; they have diverse backgrounds with three coming from public accounting, two from private industry and one each from academia and government.

The FASB has issued six pronouncements called Statement of Financial Accounting Concepts (SFAC) in a series designed to constitute a foundation of financial accounting standards. The framework is designed to prescribe the nature, function, and limits of financial accounting to be used as a guideline that will lead to consistent standards. These conceptual statements do not establish accounting standards or disclosure practices for a particular item. They are not enforceable under the Rules of Conduct of the Code of Professional Ethics.

To date the FASB has issued 150 statements on Financial Accounting Standards, various Interpretations and Technical Bulletins, and devoted substantial time and resources towards developing a Conceptual Framework for Financial Accounting.

1e page 4

Hierarchy of US GAAP

The Auditing Standard Board (ASB) is the senior authoritative organisation in the promulgation of generally accepted auditing standards. These standards include a phrase “present fairly in conformity with generally accepted accounting principles”. With this responsibility and authority, the ASB has undertaken to define the meaning of the above phrase and to delineate the sources of GAAP. The determination of which accounting principle is applicable under a particular set of conditions may be difficult or even impossible without such a determination of the hierarchy of GAAP by an authoritative body. The determination of which accounting principle is applicable under a particular set of conditions may be difficult or impossible without such a determination of the hierarchy of GAAP by authoritative body.

SAS 69, identifies the following as the hierarchy of established generally accepted accounting principles:

Authority Level

Nongovernmental Entities State and Local Governments

Highest FASB Statements and Interpretations, APB Opinions, and AICPA Accounting Research Bulletins.

GASB Statements and Interpretations plus AICPA and FASB pronouncements if made applicable to state and local governments by a GASB Statement or Interpretation

FASB Technical Bulletins AICPA Industry Audit and Accounting Guides, and AICPA Statements of Position

GASB Technical Bulletins and the following pronouncements if specifically made applicable to state and local governments by the AICPA: AICPA Industry Audit and Accounting Guides and AICPA Statements of Position

Consensus positions of the FASB Emerging Issues Task Force and AICPA Practice Bulletins

Consensus positions of the GASB Emerging Issues Task Force and AICPA Practice Bulletins if specifically made applicable to state and local governments by the AICPA

AICPA accounting interpretations, "Qs and As" published by the FASB staff, as well as industry practices widely recognized and prevalent

"Qs and As" published by the GASB staff, as well as industry practices widely recognized and prevalent

Lowest

Other accounting literature, including FASB Concepts Statements; AICPA Issues Papers; International Accounting Standards Committee Statements; GASB Statements, Interpretations and Technical Bulletins; pronouncements of other professional associations or regulatory agencies; AICPA Technical Practice Aids, and accounting textbooks, handbooks, and articles

Other accounting literature, including GASB Concepts Statements; pronouncements in categories (a) through (d) of the hierarchy for nongovernmental entities when not specifically made applicable to state and local governments; FASB Concepts Statements; AICPA Issues Papers; International Accounting Standards Committee Statements; pronouncements of other professional associations or regulatory agencies; AICPA Technical Practice Aids; and accounting textbooks, handbooks, and articles.

Detailed discussion on the Hierarchy

In SAS 69, the ASB prescribed that an independent auditor's unqualified opinion on the financial statements depends upon the financial statements being within the framework of generally accepted accounting principles. Without that framework, the auditor would have no uniform standard for judging the presentation of financial position, results of operations, and cash flows in financial statements.

The auditor's opinion that financial statements present fairly an entity's financial position, results of operations, and cash flows in conformity with generally accepted accounting principles should be based on his or her judgment as to whether: (a) the accounting principles selected and applied have general acceptance;

1e page 5

Hierarchy of US GAAP

(b) the accounting principles are appropriate in the circumstances;

(c) the financial statements, including the related notes, are informative of matters that may affect their use, understanding, and interpretation

(d) the information presented in the financial statements is classified and summarized in a reasonable manner, that is, neither too detailed nor too condensed; and

(e) the financial statements reflect the underlying transactions and events in a manner that presents the financial position, results of operations, and cash flows stated within a range of acceptable limits, that is, limits that are reasonable and practicable to attain in financial statements.

Generally accepted accounting principles recognize the importance of reporting transactions and events in accordance with their substance. The auditor should consider whether the substance of transactions or events differs materially from their form. If the accounting treatment of a transaction or event is not specified by a pronouncement covered by rule 203, the auditor should consider whether the accounting treatment is specified by another source of established accounting principles. If an established accounting principle from one or more sources in category (b), (c), or (d) is relevant to the circumstances, the auditor should be prepared to justify a conclusion that another treatment is generally accepted. If there is a conflict between accounting principles relevant to the circumstances from one or more sources in category (b), (c), or (d), the auditor should follow the treatment specified by the source in the higher category—for example, follow category (b) treatment over category (c)—or be prepared to justify a conclusion that a treatment specified by a source in the lower category better presents the substance of the transaction in the circumstances.

1e page 6

Generic Issues in Applying US GAAP

Substance over form

This is one of the fundamental concepts for measurement and presentation of accounting information in the U.S. Though the concept is not wholly alien to Indian GAAP, its application is still limited, resulting in the legal form of a transaction often determining its measurement and presentation in the Indian financial statements.

Pre-requisites for financial statements

While under the Indian Regulatory requirements, compliance with Companies Act, 1956 and the Accounting Standards issued by the Institute of Chartered Accountants of India is mandatory; US Companies with registered securities must comply with US GAAP and various filing requirements of the Securities and Exchange Commission (“SEC”). Non-US companies with registered securities in the US may issue financial statements under US GAAP or another comprehensive basis of accounting principles (such as IAS) provided reconciliation to US GAAP is given in the notes. There is no federal reporting requirement for non-public companies.

Contents of financial statements

Whilst the contents of financial statements under the Indian GAAP and the US GAAP are broadly similar, there are significant differences in the presentation/ disclosure requirements (subsequently discussed).

True and fair override

Under Indian as well as US GAAP, entities may not depart from a standard (and from company law in the case of India). Disclosures are required of the nature of and reason for the departure and its financial impact.

Accounting convention

Historical cost is the main accounting convention adopted by both frameworks. However, the Indian GAAP permits revaluation, notably for property, plant and equipment. US GAAP generally prohibits revaluation but does require certain securities (investments) and derivatives to be carried at fair value. The basic assumptions of going concern and accrual are presumed to underlie financial statements prepared under each framework, with understandability, relevance, reliability and comparability as the main attributes to be considered in selecting accounting policies.

Earnings Per Share

Till very recently, there was no requirement to disclose the Earnings Per Share (EPS) under the Indian GAAP. The Institute of Chartered Accountants of India has come out with an Accounting Standard on EPS, which prescribes disclosure of basic and diluted EPS for public quoted companies. The US GAAP also requires the publicly quoted companies to show primary and fully diluted earnings per share on the face of the income statement.

Industry specific standards

US GAAP encompasses Accounting Standards for specific industries. These Standards specify the standards of financial accounting and reporting for these industries. The industries covered by these standards are:

Broadcasting Industry Banking And Thrift Industries Cable Television Industry Computer Software To Be Sold, Leased, Or Otherwise Marketed Contractor Accounting: Construction-Type Contracts Contractor Accounting: Government Contracts Development Stage Enterprises Finance Companies Franchising: Accounting By Franchisers

1e page 7

Generic Issues in Applying US GAAP

Insurance Industry Investment Companies Mortgage Banking Activities Motion Picture Industry Not-For-Profit Organizations Oil And Gas Producing Activities Pension Funds: Accounting And Reporting By Defined Benefit Pension Plans Real Estate: Sales Real Estate: Accounting For Costs And Initial Rental Operations Of Real Estate Projects Record And Music Industry Regulated Operations Title Plant

1e page 8

Typical US GAAP issues

CONSOLIDATION

The Indian Accounting standard requires an entity presenting consolidated financial statements to consolidate all its subsidiaries. While, the standard is not mandatory for all the Companies, Securities Exchange Board of India requires all the listed companies to present Consolidated financial statements. Where the standard on consolidation is not applied, the investments in subsidiary are accounted for on the basis of Accounting Standard 13 “Accounting for Investments”

US GAAP requires consolidation where the investment held in an entity results in a parent subsidiary relationship.

Definition of Control

U.S. Position: The usual condition for a controlling financial interest is ownership of a majority voting interest, and, therefore, as a general rule ownership by one company, directly or indirectly, of over fifty percent of the outstanding voting shares of another company is a condition pointing toward consolidation.

In cases where the minority shareholder has substantive rights (rights that provide the minority shareholder with the right to effectively participate in significant decisions that would be expected to be related to the investee's ordinary course of business), such rights should overcome the presumption that the investor with a majority voting interest should consolidate its investee.

Indian Position: Control is evidenced by (a) the ownership, directly or indirectly through subsidiary (ies), of more than one-half of the voting power of an enterprise; or (b) control of the composition of the board of directors in the case of a company or of the composition of the corresponding governing body in case of any other enterprise so as to obtain economic benefits from its activities

Exclusion

U.S. Position: A majority-owned subsidiary where control is likely to be temporary or if it does not rest with the majority owner should not be consolidated (as, for instance, if the subsidiary is in legal reorganization or in bankruptcy or operates under foreign exchange restrictions, controls, or other governmentally imposed uncertainties so severe that they cast significant doubt on the parent's ability to control the subsidiary).

Indian Position: Similar to the US Position

Difference in fiscal periods

U.S. Position :It ordinarily is feasible for the subsidiary to prepare, for consolidation purposes, statements for a period, which corresponds with or closely approaches the fiscal period of the parent. However, where the difference is not more than three months, it usually is acceptable to use, for consolidation purposes, the subsidiary's statements for its fiscal period. When this is done, recognition should be given by disclosure or otherwise to the effect of intervening events which materially affect the financial position or results of operations.

Indian Position: While similar to the US Position, the Indian Accounting Standard permits a difference of six months.

Uniform Accounting Policies

U.S. Position: Consolidated financial statements should be prepared using uniform accounting policies for like transactions and other events in similar circumstances. If it is not practicable to use uniform accounting policies in preparing the consolidated financial statements, that fact should be disclosed together with the proportions of the items in the consolidated financial statements to which the different accounting policies have been appliedIndian Position: Similar to the US Position

1e page 9


Elimination of Intra-group balances and transactions

U.S. Position: Intra-group balances and intra-group transactions and resulting unrealized profits should be eliminated in full. Unrealized losses resulting from intra-group transactions should also be eliminated unless cost cannot be recovered.


Elimination of Investment

U.S. Position: The cost to the parent of the investment are compared with the parent's equity in the subsidiary's net assets at the date of acquisition, as determined on fair value basis. The resultant difference being either Goodwill or negative goodwill is recognized.

Indian Position: While the cost to the parent of the investment are compared with the parent's equity in the subsidiary's net assets at the date of acquisition, net assets as per the financial statements are considered instead of the fair values.

Minority Interest

U.S. Position: Minority interest is disclosed separately in the Income Statement and Balance Sheet. In the unusual case in which losses applicable to the minority interest in a subsidiary exceed the minority interest in the equity capital of the subsidiary, such excess and any further losses applicable to the minority interest is charged against the majority interest, unless the minority has an obligation to make good such losses. However, if future earnings do materialize, the majority interest is credited to the extent of such losses previously absorbed.


1e page 10


Deferred Taxation

US. Position

The objectives of accounting for income taxes are to recognize

(a) the amount of taxes payable or refundable for the current year and (b) deferred tax liabilities and assets for the future tax consequences of events that have been recognized in

an enterprise's financial statements or tax returns.

Basic Principles of Accounting for Income Taxes

The following basic principles are applied in accounting for income taxes at the date of the financial statements:

a. A current tax liability or asset is recognized for the estimated taxes payable or refundable on tax returns for the current year.

b. A deferred tax liability or asset is recognized for the estimated future tax effects attributable to temporary differences and carry forwards.

c. The measurement of current and deferred tax liabilities and assets is based on provisions of the enacted tax law; the effects of future changes in tax laws or rates are not anticipated.

d. The measurement of deferred tax assets is reduced, if necessary, by the amount of any tax benefits that, based on available evidence, are not expected to be realized.

Temporary Differences

The tax consequences of most events recognized in the financial statements for a year are included in determining income taxes currently payable. However, tax laws often differ from the recognition and measurement requirements of financial accounting standards, and differences can arise between (a) the amount of taxable income and pretax financial income for a year and (b) the tax bases of assets or liabilities and their reported amounts in financial statements.

APB Opinion No. 11, Accounting for Income Taxes, used the term timing differences for differences between the years in which transactions affect taxable income and the years in which they enter into the determination of pretax financial income. Timing differences create differences (sometimes accumulating over more than one year) between the tax basis of an asset or liability and its reported amount in financial statements. Other events such as business combinations may also create differences between the tax basis of an asset or liability and its reported amount in financial statements. All such differences collectively are referred to as temporary differences in this Statement.

Deferred Tax Consequences of Temporary Differences

Temporary differences ordinarily become taxable or deductible when the related asset is recovered or the related liability is settled. A deferred tax liability or asset represents the increase or decrease in taxes payable or refundable in future years as a result of temporary differences and carry forwards at the end of the current year.

Deferred Tax Liabilities

A deferred tax liability is recognized for temporary differences that will result in taxable amounts in future years. For example, a temporary difference is created between the reported amount and the tax basis of an installment sale receivable if, for tax purposes, some or all of the gain on the installment sale will be included in the determination of taxable income in future years. Because amounts received upon recovery of that receivable will be taxable, a deferred tax liability is recognized in the current year for the related taxes payable in future years.

1e page 11


Deferred Tax Assets

A deferred tax asset is recognized for temporary differences that will result in deductible amounts in future years and for carry forwards. For example, a temporary difference is created between the reported amount and the tax basis of a liability for estimated expenses if, for tax purposes, those estimated expenses are not deductible until a future year. Settlement of that liability will result in tax deductions in future years, and a deferred tax asset is recognized in the current year for the reduction in taxes payable in future years. A valuation allowance is recognized if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax asset will not be realized.

Measurement of a Deferred Tax Liability or Asset

US GAAP establishes procedures to (a) measure deferred tax liabilities and assets using a tax rate convention and (b) assess whether a valuation allowance should be established for deferred tax assets. Enacted tax laws and rates are considered in determining the applicable tax rate and in assessing the need for a valuation allowance. .

A valuation allowance is recognized if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax asset will not be realized

Changes in Tax Laws or Rates

US GAAP requires that deferred tax liabilities and assets be adjusted in the period of enactment for the effect of an enacted change in tax laws or rates. The effect is included in income from continuing operations.

Indian Position

The Indian Position is primarily similar to US position. However, while the US GAAP prescribes recognizing deferred tax asset/liability on the basis of temporary differences (liability method), the Indian accounting standard does not provides a definite approach as it uses a hybrid concept of both the deferral method and liability method.

Further, deferred tax asset is recognized only to the extent it is certain that the temporary differences will reverse. Such unrecognized assets are re-assessed at each balance sheet date and recognized as deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realized.

1e page 12


Accounting for Leases

US. Position (Lessee Perspective)

The accounting for leases, under US GAAP, is derived from the view that a lease that transfers substantially all of the benefits and risks of ownership should be accounted for as the acquisition of an asset and the incurrence of an obligation by the lessee (a capital lease) and as a sale or financing by the lessor (a sales-type, direct financing, or leveraged lease). Other leases should be accounted for as operating leases, that is, the rental of property.

A lessee classifies a lease as either a capital lease or an operating lease. If a particular lease meets any one of the following classification criteria, it is a capital lease:

a. The lease transfers ownership of the property to the lessee by the end of the lease term.b. The lease contains an option to purchase the leased property at a bargain price.c. The lease term is equal to or greater than 75 percent of the estimated economic life of the leased

property.d. The present value of rental and other minimum lease payments equals or exceeds 90 percent of the

fair value of the leased property less any investment tax credit retained by the lessor.

The last 2 criteria are not applicable when the beginning of the lease term falls within the last 25 percent of the total estimated economic life of the leased property.

The amount to be recorded by the lessee as an asset and an obligation under a capital lease is the lesser of the present value of the rental and other minimum lease payments or the fair value of the leased property. Leased property under a capital lease is amortized in a manner consistent with the lessee's normal depreciation policy for owned assets; the amortization period is restricted to the lease term, rather than the life of the asset, unless the lease provides for transfer of title or includes a bargain purchase option. The periodic rental payments are treated as payments of the lease obligation and interest is recorded on the remaining balance of the obligation.

If none of the criteria is met, a lessee classifies the lease as an operating lease. Neither an asset nor an obligation is recorded for operating leases. Rental payments are recorded as rental expense in the income statement in a systematic manner, which is usually straight-line.

Indian Position (Lessee Perspective)

The Indian Position is primarily similar to US. While US GAAP provides stringent considerations for lease classification, the Indian Accounting Standard only includes various illustrations defining a finance lease.

1e page 13


Accounting for Stock Based Compensation

US. Position

US GAAP establishes financial accounting and reporting standards for stock-based employee compensation plans. Those plans include all arrangements by which employees receive shares of stock or other equity instruments of the employer or the employer incurs liabilities to employees in amounts based on the price of the employer's stock. Examples are stock purchase plans, stock options, restricted stock, and stock appreciation rights.

FAS 123, defines a fair value based method of accounting for an employee stock option or similar equity instrument and encourages all entities to adopt that method of accounting for all of their employee stock compensation plans. However, it also allows an entity to continue to measure compensation cost for those plans using the intrinsic value based method of accounting prescribed by APB 25. Entities electing to remain with the accounting in APB 25 must make pro forma disclosures of net income and, if presented, earnings per share, as if the fair value based method of accounting defined in FAS 123 had been applied.

Under the fair value based method, compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. Under the intrinsic value based method, compensation cost is the excess, if any, of the quoted market price of the stock at grant date or other measurement date over the amount an employee must pay to acquire the stock. Most fixed stock option plans--the most common type of stock compensation plan--have no intrinsic value at grant date, and under the provisions of APB 25, no compensation cost is recognized for them. Compensation cost is recognized for other types of stock-based compensation plans under the provisions of APB 25, including plans with variable, usually performance-based, features.

For stock options, fair value is determined using an option-pricing model that takes into account the stock price at the grant date, the exercise price, the expected life of the option, the volatility of the underlying stock and the expected dividends on it, and the risk-free interest rate over the expected life of the option. Nonpublic entities are permitted to exclude the volatility factor in estimating the value of their stock options, which results in measurement at minimum value. The fair value of an option estimated at the grant date is not subsequently adjusted for changes in the price of the underlying stock or its volatility, the life of the option, dividends on the stock, or the risk-free interest rate.

The fair value of a share of nonvested stock (usually referred to as restricted stock) awarded to an employee is measured at the market price of a share of a nonrestricted stock on the grant date unless a restriction will be imposed after the employee has a vested right to it, in which case fair value is estimated taking that restriction into account.

The pro forma amounts required to be disclosed by an employer that continues to apply the accounting provisions of APB 25, will reflect the difference between compensation cost, if any, included in net income and the related cost measured by the fair value based method defined in FAS 123, including tax effects, if any, that would have been recognized in the income statement if the fair value based method had been used. The required pro forma amounts will not reflect any other adjustments to reported net income or, if presented, earnings per share.

Indian Position

While there is no pronouncement for accounting of stock based compensation, all Listed companies are required to comply with the SEBI (Employee Stock Option and Employee Stock Purchase Scheme) Guidelines, 1999. This scheme defines two types of stock based compensation

Employee stock option scheme {(ESOS): a scheme under which a company grants option to employees} and Employee stock purchase scheme {(ESPS): a scheme under which the company offers shares to employees as part of a public issue or otherwise}

Accounting for ESOS prescribed by SEBI is similar to US GAAP, compensation cost is measured at the grant date based on the fair value of the award and is amortized on straight-line basis over the vesting period. Fair

1e page 14


value is computed on the basis of excess of market price over exercise price or by using the value of the option using the Black Scholes formula or other similar valuation method.

In case of ESPS, excess of the market price of the shares at the date of issue over the price at which they are issued is considered as cost of the period in which granted.

1e page 15


Impairment

US. Position

US GAAP require a three-step approach for recognizing and measuring the impairment of assets to be held and used. Under that three-step approach, a company needs to:

(a) consider whether indicators of impairment of long-lived assets are present,

(b) if indicators of impairment are present, determine whether the sum of undiscounted cash flows attributable to the assets in question is less than the assets’ carrying amount, and

(c) if the sum of the undiscounted cash flows is less than the assets’ carrying amount, recognize an impairment loss based on the excess of the carrying amount of the assets over their respective fair values.

Assets to be held and used by an entity are required to be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In performing the review for recoverability, the entity should estimate the future cash flows expected to result from the use of the asset and its eventual disposition. If the sum of the expected future cash flows (undiscounted and without interest charges) is less than the carrying amount of the asset, an impairment loss is recognized. Otherwise, an impairment loss is not recognized. Measurement of an impairment loss should be based on the fair value of the asset.

Indian Position

Conceptually, in line with US GAAP.

1e page 16


Derivatives

US. Position

FAS 133, establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, (collectively referred to as derivatives) and for hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. If certain conditions are met, a derivative may be specifically designated as

(a) a hedge of the exposure to changes in the fair value of a recognized asset or liability or an unrecognized firm commitment,

(b) a hedge of the exposure to variable cash flows of a forecasted transaction, or (c) a hedge of the foreign currency exposure of a net investment in a foreign operation, an unrecognized firm

commitment, an available-for-sale security, or a foreign-currency-denominated forecasted transaction.

The accounting for changes in the fair value of a derivative (that is, gains and losses) depends on the intended use of the derivative and the resulting designation.

For a derivative designated as hedging the exposure to changes in the fair value of a recognized asset or liability or a firm commitment (referred to as a fair value hedge), the gain or loss is recognized in earnings in the period of change together with the offsetting loss or gain on the hedged item attributable to the risk being hedged. The effect of that accounting is to reflect in earnings the extent to which the hedge is not effective in achieving offsetting changes in fair value.

For a derivative designated as hedging the exposure to variable cash flows of a forecasted transaction (referred to as a cash flow hedge), the effective portion of the derivative’s gain or loss is initially reported as a component of other comprehensive income (outside earnings) and subsequently reclassified into earnings when the forecasted transaction affects earnings. The ineffective portion of the gain or loss is reported in earnings immediately.

For a derivative designated as hedging the foreign currency exposure of a net investment in a foreign operation, the gain or loss is reported in other comprehensive income (outside earnings) as part of the cumulative translation adjustment. The accounting for a fair value hedge described above applies to a derivative designated as a hedge of the foreign currency exposure of an unrecognized firm commitment or an available-for-sale security. Similarly, the accounting for a cash flow hedge described above applies to a derivative designated as a hedge of the foreign currency exposure of a foreign-currency-denominated forecasted transaction.

For a derivative not designated as a hedging instrument, the gain or loss is recognized in earnings in the period of change.

Under this FAS, an entity that elects to apply hedge accounting is required to establish at the inception of the hedge the method it will use for assessing the effectiveness of the hedging derivative and the measurement approach for determining the ineffective aspect of the hedge. Those methods must be consistent with the entity’s approach to managing risk.

Indian Position

No pronouncement on Derivatives

1e page 17


Disclosure of Accounting Policies

Indian Position

All significant accounting policies adopted in the preparation and presentation of financial statements should be disclosed.

The disclosure of the significant accounting policies as such should form part of the financial statements and the significant accounting policies should normally be disclosed in one place.

Any change in the accounting policies which has a material effect in the current period or which is reasonably expected to have a material effect in later periods should be disclosed. In the case of a change in accounting policies that has a material effect in the current period, the amount by which any item in the financial statements is affected by such change should also be disclosed to the extent ascertainable. Where such amount is not ascertainable, wholly or in part, the fact should be indicated.

If the fundamental accounting assumptions, viz. Going Concern, Consistency and Accrual are followed in financial statements, specific disclosure is not required. If a fundamental accounting assumption is not followed, the fact should be disclosed.

US. Position

The accounting policies of a reporting enterprise are the specific accounting principles and the methods of applying those principles that are judged by the management of the enterprise to be the most appropriate in the circumstances to present fairly financial position, cash flows, and results of operations in accordance with generally accepted accounting principles and that accordingly have been adopted for preparing the financial statements.

All significant accounting policies followed by an enterprise shall be disclosed in its financial statements. The format and the location of the disclosure are flexible, although preference is given to the use of a separate summary preceding the notes to the financial statements or to presentation as the first note.

Information about the accounting policies adopted by a reporting enterprise is essential for financial statement users. When financial statements are issued purporting to present fairly financial position, cash flows, and results of operations in accordance with generally accepted accounting principles, a description of all significant accounting policies of the reporting enterprise shall be included as an integral part of the financial statements. If one or more of the basic financial statements [are issued] without the others and purport to present fairly the information given in accordance with generally accepted accounting principles, the statements so presented shall also include disclosure of the pertinent accounting policies.

All business enterprises are required to provide disclosures about significant accounting policies used to prepare financial statements that are intended to be in conformity with generally accepted accounting principles.

Disclosure of accounting policies shall identify and describe the accounting principles followed by the reporting enterprise and the methods of applying those principles that materially affect the determination of financial position, cash flows, or results of operations. In general, the disclosure shall encompass important judgments as to appropriateness of principles relating to recognition of revenue and allocation of asset costs to current and future periods; in particular, it shall encompass those accounting principles and methods that involve any of the following:

a. A selection from existing acceptable alternatives;b. Principles and methods peculiar to the industry in which the reporting enterprise operates, even if such

principles and methods are predominantly followed in that industry;c. Unusual or innovative applications of generally accepted accounting principles (and, as applicable, of

principles and methods peculiar to the industry in which the reporting enterprise operates).

1e page 18


Financial statement disclosure of accounting policies shall not duplicate details (for example, composition of inventories or of plant assets) presented elsewhere as part of the financial statements. In some cases, the disclosure of accounting policies shall refer to related details presented elsewhere as part of the financial statements; for example, changes in accounting policies during the period shall be described with cross-reference to the disclosure required by, "Accounting Changes," of the current effect of the change and of the pro forma effect of retroactive application.

Whilst the Indian Standard lays much emphasis on the fundamental accounting assumptions, US GAAP envisages the financial statements to be in accordance with generally accepted accounting principles.

1e page 19


Valuation of Inventories

Indian Position

Inventories are (a) assets held for sale in the ordinary course of business, (b) in the process of production for such sale, or (c) in the form of materials or supplies to be consumed in the production process or in the rendering of services and are valued at the lower of cost and net realisable value. The cost of inventories should comprise all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. The costs of conversion of inventories include costs directly related to the units of production, such as direct labour. They also include a systematic allocation of fixed and variable production overheads that are incurred in converting materials into finished goods.

The cost of inventories of items that are not ordinarily interchangeable and goods or services produced and segregated for specific projects should be assigned by specific identification of their individual costs. The cost of other inventories should be assigned by using the first-in, first-out (FIFO), or weighted average cost formula. The formula used should reflect the fairest possible approximation to the cost incurred in bringing the items of inventory to their present location and condition.

US. Position

Inventory is the aggregate of those items of tangible personal property that (a) are held for sale in the ordinary course of business [(finished goods)], (b) are in process of production for such sale [(work in process)], or (c) are to be currently consumed either directly or indirectly in the production of goods or services to be available for sale [(raw materials and supplies)] and are valued at the lower of cost or market except in certain exceptional cases when it may be stated above cost. Cost is defined as the sum of the applicable expenditures and charges directly or indirectly incurred in bringing inventories to their existing condition and location. Cost for inventory purposes may be determined under any one of several assumptions as to the flow of cost factors (such as first-in, first-out; average; and last-in, first-out). While US GAAP prescribes the last in first out method, it has been under challenge with SEC registrants.

General and Administrative expenses shall be included as period charges, except for the portion of such expenses that [are] clearly related to production and thus constitute a part of inventory costs (product charges). Selling expenses [are not] part of inventory costs. Exclusion of all overheads from inventory costs does not constitute an accepted accounting procedure.

Except for specified cost formula for the cost of inventories of items that are not ordinarily interchangeable FIFO and weighted average cost formulae are permitted under the Indian GAAP. Under the US GAAP, the cost is determined under any one of several assumptions as to the flow of cost factors (such as first-in, first-out; average; and last-in, first-out). Further, US GAAP also permits to value inventory at higher than cost in specific cases. (For example, precious metals having a fixed monetary value with no substantial cost of marketing may be stated at such monetary value). Any other exceptions must be justifiable by inability to determine appropriate approximate costs, immediate marketability at quoted market price, and the characteristic of unit interchangeability.

1e page 20


Cash Flow Statement

Indian Position

The cash flow statement should report cash flows during the period classified by operating, investing and financing activities. An enterprise presents its cash flows from operating, investing and financing activities in a manner which is most appropriate to its business. An enterprise should report cash flows from operating activities using either (a) the direct method, whereby major classes of gross cash receipts and gross cash payments are disclosed; or (b) the indirect method, whereby net profit or loss is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments, and items of income or expense associated with investing or financing cash flows.

US. Position

A statement of cash flows is required as part of a full set of financial statements for all business enterprises and not-for-profit organizations other than defined benefit pension plans and certain other employee benefit plans and highly liquid investment companies that meet specified conditions.

A statement of cash flows shall classify cash receipts and payments according to whether they stem from operating, investing, or financing activities. Enterprises are encouraged to report cash flows from operating activities directly by showing major classes of operating cash receipts and payments (the direct method). Enterprises that choose not to show operating cash receipts and payments are required to report the same amount of net cash flow from operating activities indirectly by adjusting net income of a business enterprise or change in net assets of a not-for-profit organization to reconcile it to net cash flow from operating activities (the indirect or reconciliation method). If the direct method is used, a reconciliation of net income of a business enterprise or change in net assets of a not-for-profit organization and net cash flow from operating activities is required to be provided in a separate schedule.

Whilst the Accounting Standard on Cash Flow in India is mandatory only for entities achieving turnover of more than Rs. 500 million, under the US GAAP, cash flow forms a part of full set of financial statements for all business enterprises.

Note:(As per the SEBI guidelines, Publishing of Cash Flow statement is mandatory for all the listed Indian Companies)

1e page 21


Segmental Information

Indian position

All public quoted companies and non-quoted enterprises with turnover exceeding Rs 500 million are required to provide disclosure about its reportable segments. The standard requires disclosure relating to business segment and geographical segment. A segment (business and geographical) is a distinguishable component that is subject to risks and returns that are different from those of other segments. The segment information should be prepared in conformity with the accounting policies adopted for preparing and presenting the financial statements of the enterprise as a whole.

US. Position

Under US GAAP public quoted companies are required to provide disclosure about its operating segments. Such segments are to be determined on the basis used by the internal management to measure the performance. Further, if a segment contributes to more than 10% of the combined total results, it should be disclosed separately. The standard does not prescribe the accounting policies to be used and, thus, permits alternative bases of accounting for segments, as long as the basis used for reporting segment information is the same basis which the internal management uses for making decisions about allocating resources to the segment and assessing its performance.

1e page 22


Contingencies

Indian Position

The term "contingencies" used in this Statement is restricted to conditions or situations at the balance sheet date, the financial effect of which is to be determined by future events which may or may not occur.

The accounting treatment of a contingent loss is determined by the expected outcome of the contingency. If it is likely that a contingency will result in a loss to the enterprise, then it is prudent to provide for that loss in the financial statements. If there is conflicting or insufficient evidence for estimating the amount of a contingent loss, then disclosure is made of the existence and nature of the contingency. The existence and amount of guarantees, obligations arising from discounted bills of exchange and similar obligations undertaken by an enterprise are generally disclosed in financial statements by way of note, even though the possibility that a loss to the enterprise will occur is remote. Provisions for contingencies are not made in respect of general or unspecified business risks since they do not relate to conditions or situations existing at the balance sheet date.

Contingent gains are not recognised in financial statements since their recognition may result in the recognition of revenue which may never be realised. However, when the realisation of a gain is virtually certain, then such gain is not a contingency and accounting for the gain is appropriate.

US. Position

An estimated loss from a loss contingency shall be charged to income if (a) it is probable that an asset had been impaired or a liability had been incurred at the date of the financial statements and (b) the amount of the loss can be reasonably estimated. Disclosure is required for loss contingencies not meeting both those conditions if there is a reasonable possibility that a loss may have been incurred. Gain contingencies shall not be credited to income because to do so would recognize income prior to realization.

Whilst under the US GAAP the contingent events are classified into probable, possible and remote and accounted for accordingly, no such classification is specified under the Indian GAAP. Institute of Chartered Accountants of India has recently introduced Accounting Standard 29 on Provisions, Contingent Liabilities and Contingent Liabilities, which is applicable from accounting periods commencing on or after April 1,2004. This standard is in line with the US Position and requires contingencies to be classified into probable, possible and remote and accounted for accordingly.

1e page 23


Depreciation

Indian Position

The depreciable amount of a depreciable asset should be allocated on a systematic basis to each accounting period during the useful life of the asset. The depreciation method selected should be applied consistently from period to period. A change from one method of providing depreciation to another should be made only if the adoption of the new method is required by statute or for compliance with an accounting standard or if it is considered that the change would result in a more appropriate preparation or presentation of the financial statements of the enterprise. When such a change in the method of depreciation is made, depreciation should be recalculated in accordance with the new method from the date of the asset coming into use. The deficiency or surplus arising from retrospective recomputation of depreciation in accordance with the new method should be adjusted in the accounts in the year in which the method of depreciation is changed. In case the change in the method results in deficiency in depreciation in respect of past years, the deficiency should be charged in the statement of profit and loss. In case the change in the method results in surplus, the surplus should be credited to the statement of profit and loss. Such a change should be treated as a change in accounting policy and its effect should be quantified and disclosed.

Where the historical cost of a depreciable asset has undergone a change due to increase or decrease in long term liability on account of exchange fluctuations, price adjustments, changes in duties or similar factors, the depreciation on the revised unamortised depreciable amount should be provided prospectively over the residual useful life of the asset.

Where the depreciable assets are revalued, the provision for depreciation should be based on the revalued amount and on the estimate of the remaining useful lives of such assets. In case the revaluation has a material effect on the amount of depreciation, the same should be disclosed separately in the year in which revaluation is carried out.

US. Position

Depreciation is the method of allocating the cost of a tangible capital asset, less salvage (if any), over the estimated useful life of the asset in a systematic and rational manner. Except when an enterprise is undergoing reorganization, capital assets shall not be depreciated at appraisal, market, or current values that are above cost to the enterprise.

Property, plant, and equipment shall not be written up by an enterprise to reflect appraisal, market, or current values which are above cost to the enterprise. However, when the accounts of an enterprise with foreign operations are translated into U.S. currency for consolidation, such write-ups normally are eliminated. Whenever appreciation has been recorded on the books, income shall be charged with depreciation computed on the written-up amounts.

Change in method of depreciation should be accounted for as change in accounting principles, which suggests that for all changes in accounting principle (a) Financial statements for prior periods included for comparative purposes shall be presented as previously reported. (b)The cumulative effect of changing to a new accounting principle on the amount of retained earnings at the beginning of the period in which the change is made shall be included in net income of the period of the change (c) The effect of adopting the new accounting principle on income before extraordinary items and on net income (and on the related per share amounts) of the period of the change shall be disclosed. (d) Income before extraordinary items and net income computed on a pro forma basis shall be shown on the face of the income statements for all periods presented as if the newly adopted accounting principle had been applied during all periods affected

Whilst Schedule VI to the Companies Act, 1956 prescribes the depreciation rates for Indian companies, under the US GAAP, depreciation is provided on the cost of a tangible capital asset, less salvage (if any), over the estimated useful life of the asset in a systematic and rational manner. The US GAAP does not permits revaluation of assets, thus there is no concept of providing depreciation on the same. The effect of change in method is to be applied retroactively under both the frameworks and is to be shown in the net income for the current year.

1e page 24


Accounting for Research and Development Cost

Indian Position

Research is original and planned investigation undertaken with the hope of gaining new scientific or technical knowledge and understanding. Development is the translation of research findings or other knowledge into a plan or design for the production of new or substantially improved materials, devices, products, processes, systems or services prior to the commencement of commercial production.

The allocation of the costs of research and development activities to accounting periods is determined by their relationship to the expected future benefits to be derived from these activities. In most cases there is little, if any, direct relationship between the amount of current research and development costs and future benefits because the amount of such benefits, and the periods over which they will be received, are usually too uncertain. Research and development costs are therefore usually charged to expense in the period in which they are incurred.

If it can be demonstrated, however, that the product or process is technically and commercially feasible and that the enterprise has adequate resources to enable the product or process to be marketed, it may be appropriate to defer the costs of related research and development to future periods. Research and development costs previously written off are not reinstated because they were incurred at a time when the technical and commercial feasibility of the project was too uncertain to establish a relationship with future benefits and they were therefore proper charges to those past periods.

Deferred research and development costs are amortised on a systematic basis, either by reference to the sale or use of the product or process or by reference to a reasonable time period. However, technological and economic obsolescence create uncertainties that restrict the number of units and time period over which deferred costs are to be amortised.

US. Position

Research is planned search or critical investigation aimed at discovery of new knowledge with the hope that such knowledge will be useful in developing a new product or service (hereinafter product) or a new process or technique (hereinafter process) or in bringing about a significant improvement to an existing product or process. Development is the translation of research findings or other knowledge into a plan or design for a new product or process or for a significant improvement to an existing product or process whether intended for sale or use. It includes the conceptual formulation, design, and testing of product alternatives, construction of prototypes, and operation of pilot plants. It does not include routine or periodic alterations to existing products, production lines, manufacturing processes, and other ongoing operations, even though those alterations may represent improvements, and it does not include market research or market-testing activities.

All research and development costs encompassed shall be charged to expense when incurred.

Under the Indian GAAP, Research and Development (R&D) costs are expensed as incurred, except for plant and equipment, which are capitalised and depreciated if they have alternative future uses, or amortised over the estimated term of the R&D project, if they have no alternative future use. US GAAP, requires a similar accounting except for that the expense on plant and equipment is charged to expenses.

1e page 25


Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies

Indian Position

Ordinary activities are any activities which are undertaken by an enterprise as part of its business and such related activities in which the enterprise engages in furtherance of, incidental to, or arising from, these activities. All items of income and expense which are recognised in a period should be included in the determination of net profit or loss for the period unless an Accounting Standard requires or permits otherwise. Normally, all items of income and expense which are recognised in a period are included in the determination of the net profit or loss for the period. This includes extraordinary items and the effects of changes in accounting estimates.

Extraordinary items are income or expenses that arise from events or transactions that are clearly distinct from the ordinary activities of the enterprise and, therefore, are not expected to recur frequently or regularly. Extraordinary items should be disclosed in the statement of profit and loss as a part of net profit or loss for the period. The nature and the amount of each extraordinary item should be separately disclosed in the statement of profit and loss in a manner that its impact on current profit or loss can be perceived. Virtually all items of income and expense included in the determination of net profit or loss for the period arise in the course of the ordinary activities of the enterprise. Therefore, only on rare occasions does an event or transaction give rise to an extraordinary item.

Prior period items are income or expenses which arise in the current period as a result of errors or omissions in the preparation of the financial statements of one or more prior periods. The nature and amount of prior period items should be separately disclosed in the statement of profit and loss in a manner that their impact on the current profit or loss can be perceived. Errors in the preparation of the financial statements of one or more prior periods may be discovered in the current period. Errors may occur as a result of mathematical mistakes, mistakes in applying accounting policies, misinterpretation of facts, or oversight. Prior period items are normally included in the determination of net profit or loss for the current period. An alternative approach is to show such items in the statement of profit and loss after determination of current net profit or loss. In either case, the objective is to indicate the effect of such items on the current profit or loss.

Accounting policies are the specific accounting principles and the methods of applying those principles adopted by an enterprise in the preparation and presentation of financial statements. A change in an accounting policy should be made only if the adoption of a different accounting policy is required by statute or for compliance with an accounting standard or if it is considered that the change would result in a more appropriate presentation of the financial statements of the enterprise.

The effect of a change in an accounting estimate should be included in the determination of net profit or loss in:

(a) the period of the change, if the change affects the period only; or(b) the period of the change and future periods, if the change affects both.

A change in an accounting estimate may affect the current period only or both the current period and future periods. For example, a change in the estimate of the amount of bad debts is recognised immediately and therefore affects only the current period. However, a change in the estimated useful life of a depreciable asset affects the depreciation in the current period and in each period during the remaining useful life of the asset. In both cases, the effect of the change relating to the current period is recognised as income or expense in the current period. The effect, if any, on future periods, is recognised in future periods.

1e page 26


US. Position

The term accounting change means a change in

(a) an accounting principle, (b) an accounting estimate, or (c) the reporting enterprise (which is a special type of change in accounting principle)

The correction of an error in previously issued financial statements is not deemed to be an accounting change. . If prior period adjustments are recorded, the resulting effects (both gross and net of applicable income tax) on the net income of prior periods shall be disclosed in the annual report for the year in which the adjustments are made. If financial statements for a single period only are presented, this disclosure shall indicate the effects of such restatement on the balance of retained earnings at the beginning of the period and on the net income of the immediately preceding period. If financial statements for more than one period are presented, which is ordinarily the preferable procedure, the disclosure shall include the effects for each of the periods included in the statements. Such disclosures shall include the amounts of income tax applicable to the prior period adjustments. Disclosure of restatements in annual reports issued subsequent to the first such post revision disclosure would ordinarily not be required.

A change in accounting principle results from adoption of a generally accepted accounting principle different from the one used previously for reporting purposes. The term accounting principle includes not only accounting principles and practices but also the methods of applying them. A characteristic of a change in accounting principle is that it concerns a choice from among two or more generally accepted accounting principles. The nature of and justification for a change in accounting principle and its effect on income shall be disclosed in the financial statements of the period in which the change is made. The justification for the change shall explain clearly why the newly adopted accounting principle is preferable.

Most changes in accounting shall be recognized by including the cumulative effect, based on a retroactive computation, of changing to a new accounting principle in net income of the period of the change but a few specific changes in accounting principles shall be reported by restating the financial statements of prior periods

For all changes in accounting principle except for few specific cases (discussed below), regarding a change in entity:

a. Financial statements for prior periods included for comparative purposes shall be presented as previously reported.

b. The cumulative effect of changing to a new accounting principle on the amount of retained earnings at the beginning of the period in which the change is made shall be included in net income of the period of the change

c. The effect of adopting the new accounting principle on income before extraordinary items and on net income (and on the related per share amounts) of the period of the change shall be disclosed.

d. Income before extraordinary items and net income computed on a pro forma basis shall be shown on the face of the income statements for all periods presented as if the newly adopted accounting principle had been applied during all periods affected

Thus, income before extraordinary items and net income (exclusive of the cumulative adjustment) for the period of the change shall be reported on the basis of the newly adopted accounting principle.

As mentioned above, certain changes in the accounting policies are such that the advantages of the retroactive treatment in prior period reports outweighs the disadvantages. Accordingly, for those few changes the financial statements of all prior periods presented shall be restated. The changes that shall be accorded that treatment are:

a. a change from the LIFO method of inventory policy to another policy.b. a change in the method of accounting for long term construction type contracts, and,c. a change from the retirement - replacement - betterment accounting to depreciation accounting.

1e page 27


The nature of and justification for a change in accounting principle along with the effect of the change on income before extraordinary items, net income and the earning per share amounts shall be disclosed for all periods presented. That the disclosure may be on the face of the income statement or in the notes. Financial statements of the subsequent periods need not repeat the disclosure.

Changes in estimates used in accounting are necessary consequences of periodic presentations of financial statements. Preparing financial statements requires estimating the effects of future events. Examples of items for which estimates are necessary are uncollectible receivables, inventory obsolescence, service lives and salvage values of depreciable assets, warranty costs, periods benefited by a deferred cost, and recoverable mineral reserves. Future events and their effects cannot be perceived with certainty; estimating, therefore, requires the exercise of judgment. Thus, accounting estimates change as new events occur, as more experience is acquired, or as additional information is obtained. The effect of a change in accounting estimate shall be accounted for in (a) the period of change if the change affects that period only or (b) the period of change and future periods if the change affects both. A change in an estimate shall not be accounted for by restating amounts reported in financial statements of prior periods or by reporting pro forma amounts for prior periods.

Whilst under both the frameworks the accounting for changes is to be done in the year of change, US GAAP has some exceptions and permits for disclosing such changes as changes in the opening retained earnings. Further, the prior period error corrections are disclosed separately in the current statement of profit and loss under the Indian GAAP, whereas under the US GAAP, prior period error corrections are excluded from the current statements of profit and loss account and reflected as adjustments to the opening balance of retained earnings in single period statements

1e page 28


Revenue Recognition

Indian Position

Revenue from sales or service transactions should be recognised when the requirements as to performance set are satisfied, provided that at the time of performance it is not unreasonable to expect ultimate collection. If at the time of raising of any claim it is unreasonable to expect ultimate collection, revenue recognition should be postponed.

In a transaction involving the sale of goods, performance should be regarded as being achieved when the following conditions have been fulfilled:

(i) the seller of goods has transferred to the buyer the property in the goods for a price or all significant risks and rewards of ownership have been transferred to the buyer and the seller retains no effective control of the goods transferred to a degree usually associated with ownership; and

(ii) no significant uncertainty exists regarding the amount of the consideration that will be derived from the sale of the goods.

In a transaction involving the rendering of services, performance should be measured either under the completed service contract method or under the proportionate completion method, whichever relates the revenue to the work accomplished. Such performance should be regarded as being achieved when no significant uncertainty exists regarding the amount of the consideration that will be derived from rendering the service.

Revenue arising from the use by others of enterprise resources yielding interest, royalties and dividends should only be recognised when no significant uncertainty as to measurability or collectability exists. These revenues are recognised on the following bases:(i) Interest : on a time proportion basis taking into account the amount outstanding and the rate

applicable.(ii) Royalties: on an accrual basis in accordance with the terms of the relevant agreement.(iii) Dividends from investments in shares: when the owner's right to receive payment is established.

US. Position

Profit ordinarily shall be recognized at the time a sale in the ordinary course of business is effected. Accordingly, revenues ordinarily shall be recognized at the time a transaction is completed, with appropriate provision for uncollectible accounts.

Revenue from the sale of separately priced extended warranty and product maintenance contracts should be deferred and generally recognized in income on a straight-line basis. Costs that are directly related to the acquisition of those contracts are deferred and charged to expense in proportion to the revenue recognized. All other costs are charged to expense as incurred.

Revenue from sales transactions in which the buyer has a right to return the product shall be recognized at time of sale only if the following conditions are met.

a. The seller's price to the buyer is substantially fixed or determinable at the date of sale.b. The buyer has paid the seller, or the buyer is obligated to pay the seller and the obligation is not

contingent on resale of the product.c. The buyer's obligation to the seller would not be changed in the event of theft or physical destruction

or damage of the product.d. The buyer acquiring the product for resale has economic substance apart from that provided by the

seller. e. The seller does not have significant obligations for future performance to directly bring about resale

of the product by the buyer.f. The amount of future returns can be reasonably estimated

1e page 29


Sales revenue and cost of sales that are not recognized at time of sale because the foregoing conditions are not met shall be recognized either when the return privilege has substantially expired or if those conditions subsequently are met, whichever occurs first.

If sales revenue is recognized because the conditions above are met, any costs or losses that may be expected in connection with any returns shall be accrued in accordance with "Contingencies." Sales revenue and cost of sales reported in the income statement shall be reduced to reflect estimated returns.

In addition to above there are other pronouncements covering specifically the following:

Software Revenue Recognition Revenue Recognition on Options to Purchase Stock of Another Entity Distribution Fees by Distributors of Mutual Funds That Do Not Have a Front-End Sales Charge Revenue Recognition by Television 'Barter' Syndicators Revenue Recognition of Long-Term Power Sales Contracts Revenue and Expense Recognition for Freight Services in Process Revenue Recognition on Sales with a Guaranteed Minimum Resale Value Revenue Recognition on Equipment Sold and Subsequently Repurchased Subject to an Operating Lease Revenue Recognition under Long-Term Power Sales Contracts That Contain both Fixed and Variable

Pricing Terms”]

In essence, the basic principles of Revenue Recognition are similar under the two frameworks. However, US GAAP has elaborate guidance under Revenue Recognition

1e page 30


Accounting for the Effects of Changes in Foreign Exchange Rates

Indian Position

Exchange differences arising on foreign currency transactions should be recognised as income or as expense in the period in which they arise, except that the exchange differences arising on repayment of liabilities incurred for the purpose of acquiring fixed assets, which are carried in terms of historical cost, should be adjusted in the carrying amount of the respective fixed assets. The carrying amount of such fixed assets should, to the extent not already so adjusted or otherwise accounted for, also be adjusted to account for any increase or decrease in the liability of the enterprise, as expressed in the reporting currency by applying the closing rate, for making payment towards the whole or a part of the cost of the assets or for repayment of the whole or a part of the monies borrowed by the enterprise from any person, directly or indirectly, in foreign currency specifically for the purpose of acquiring those assets.

The carrying amount of fixed assets which are carried in terms of revalued amounts should also be adjusted in the manner described above. However, such adjustment should not result in the net book value of a class of revalued fixed assets exceeding the recoverable amount of assets of that class, the remaining amount of the increase in liability, if any, being debited to the revaluation reserve, or to the profit and loss statement in the event of inadequacy or absence of the revaluation reserve.

The difference between the forward rate and the exchange rate at date of the transaction should be recognised as income or expense over the life of the contract, except in respect of liabilities incurred for acquiring fixed assets, in which case, such difference should be adjusted in the carrying amount of the respective fixed assets.

The difference between the forward rate and the exchange rate at the inception of a forward exchange contract is recognised as income or expense over the life of the contract. The only exception is in respect of forward exchange contracts related to liabilities in foreign currency incurred for acquisition of fixed assets.

Any profit or loss arising on cancellation or renewal of a forward exchange contract should be recognised as income or as expense for the period, except in case of a forward exchange contract relating to liabilities incurred for acquiring fixed assets, in which case, such profit or loss should be adjusted in the carrying amount of the respective fixed assets.

US. Position

Foreign currency transactions are transactions denominated in a currency other than the entity's functional currency. Foreign currency transactions may produce receivables or payables that are fixed in terms of the amount of foreign currency that will be received or paid. A change in exchange rates between the functional currency and the currency in which a transaction is denominated increases or decreases the expected amount of functional currency cash flows upon settlement of the transaction. That increase or decrease in expected functional currency cash flows is a foreign currency transaction gain or loss that generally shall be included in determining net income for the period in which the exchange rate changes. Likewise, a transaction gain or loss (measured from the transaction date or the most recent intervening balance sheet date, whichever is later) realized upon settlement of a foreign currency transaction generally shall be included in determining net income for the period in which the transaction is settled. The exceptions to this requirement for inclusion in net income of transaction gains and losses are (a) Foreign currency transactions that are designated as, and are effective as, economic hedges of a net investment in a foreign entity, (b) Intercompany foreign currency transactions that are of a long-term-investment nature (that is, settlement is not planned or anticipated in the foreseeable future), when the entities to the transaction are consolidated, combined, or accounted for by the equity method in the reporting enterprise's financial statements

The accounting for a gain or loss on a foreign currency transaction that is intended to hedge an identifiable foreign currency commitment is addressed by the Statement on Derivatives, FAS - 133.

1e page 31


Whilst the Indian Accounting Standards requires that the exchange differences on repayment/restatement of liabilities incurred for the purpose of acquiring fixed assets, which are carried in terms of historical cost, should be adjusted in the carrying amount of the respective fixed assets, US GAAP requires that all the exchange difference be charged to expense. Institute of Chartered Accountants of India has recently introduced revised Accounting Standard 11 on Accounting for the effects of changes in Foreign Exchange Rates, which is applicable from accounting periods commencing on or after April 1,2004. The key difference from the earlier AS11 is that the revised AS11requires exchange differences on repayment/restatement of liabilities incurred for the purpose of acquiring fixed assets, which are carried in terms of historical cost to be charged to revenue. Further, the revised standard also discussed the accounting treatment of foreign subsidiaries.

Under the Indian GAAP, there is specific guidance on accounting for exchange differences on forward contract, however US GAAP classifies a forward cover as hedge under FAS 133 and requires to disclose the same on the fair value.

1e page 32


Accounting for Investments

Indian Position

An enterprise should disclose current investments and long-term investments distinctly in its financial statements. Further classification of current and long-term investments should be as specified in the statute governing the enterprise. In the absence of a statutory requirement, such further classification should disclose, where applicable, investments in:

(a) Government or Trust securities(b) Shares, debentures or bonds(c) Investment properties(d) Others—specifying nature.

The cost of an investment should include acquisition charges such as brokerage, fees and duties. If an investment is acquired, or partly acquired, by the issue of shares or other securities, the acquisition cost should be the fair value of the securities issued (which in appropriate cases may be indicated by the issue price as determined by statutory authorities). The fair value may not necessarily be equal to the nominal or par value of the securities issued. If an investment is acquired in exchange for another asset, the acquisition cost of the investment should be determined by reference to the fair value of the asset given up. Alternatively, the acquisition cost of the investment may be determined with reference to the fair value of the investment acquired if it is more clearly evident.

An enterprise holding investment properties should account for them as long-term investments.

Investments classified as current investments should be carried in the financial statements at the lower of cost and fair value determined either on an individual investment basis or by category of investment, but not on an overall (or global) basis.

Investments classified as long-term investments should be carried in the financial statements at cost. However, provision for diminution shall be made to recognise a decline, other than temporary, in the value of the investments, such reduction being determined and made for each investment individually.

Any reduction in the carrying amount and any reversals of such reductions should be charged or credited to the profit and loss statement.

US. Position

US GAAP addresses the accounting and reporting for investments in equity securities that have readily determinable fair values and for all investments in debt securities. Those investments are to be classified in three categories and accounted for as follows:

Debt securities that the enterprise has the positive intent and ability to hold to maturity are classified as held-to-maturity securities and reported at amortized cost.

Debt and equity securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities and reported at fair value, with unrealized gains and losses included in earnings.

Debt and equity securities not classified as either held-to-maturity securities or trading securities are classified as available-for-sale securities and reported at fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income.

At acquisition, an enterprise shall classify debt and equity securities into one of three categories: held-to-maturity, available-for-sale, or trading. At each reporting date, the appropriateness of the classification shall be reassessed.

1e page 33


Investments in debt securities shall be classified as held-to-maturity and measured at amortized cost in the statement of financial position only if the reporting enterprise has the positive intent and ability to hold those securities to maturity. A security may not be classified as held-to-maturity if that security can contractually be prepaid or otherwise settled in such a way that the holder of the security would not recover substantially all of its recorded investment. A debt security with those characteristics should be classified in one of the following categories and measured at fair value in the statement of financial position:

a. Trading securities. Securities that are bought and held principally for the purpose of selling them in the near term (thus held for only a short period of time) shall be classified as trading securities. Trading generally reflects active and frequent buying and selling, and trading securities are generally used with the objective of generating profits on short-term differences in price.

b. Available-for-sale securities. Investments not classified as trading securities (nor as held-to-maturity securities) shall be classified as available-for-sale securities.

Unrealized holding gains and losses for trading securities shall be included in earnings. Unrealized holding gains and losses for available-for-sale securities (including those classified as current assets) shall be excluded from earnings and reported in other comprehensive income until realized except as indicated in the following sentence. All or a portion of the unrealized holding gain and loss of an available-for-sale security that is designated as being hedged in a fair value hedge shall be recognized in earnings during the period of the hedge, pursuant to FAS133.

Dividend and interest income, including amortization of the premium and discount arising at acquisition, for all three categories of investments in securities shall continue to be included in earnings.

Whilst the Indian GAAP defines and mentions the accounting principles for short term and long-term investments, US GAAP envisages debt securities, trading securities and available-for-sale securities.

1e page 34


Accounting for Amalgamations /Business Combination

Basic Principles

US Position: The accounting for a business combination follows the concepts normally applicable to the initial recognition and measurement of assets acquired, liabilities assumed or incurred, and equity shares issued, as well as to the subsequent accounting for those items.

Indian Position: Similar to US. Combinations are referred to as Amalgamation under the Indian framework.

Types of Combinations

US Position: A business combination occurs when an entity acquires net assets that constitute a business or acquires equity interests of one or more other entities and obtains control over that entity or entities. It excludes transactions in which control is obtained through means other than an acquisition of net assets or equity interests. The provisions of the standard on business combination apply equally to a business combination in which (a) one or more entities are merged or become subsidiaries, (b) one entity transfers net assets or its owners transfer their equity interests to another, or (c) all entities transfer net assets or the owners of those entities transfer their equity interests to a newly formed entity (some of which are referred to as roll-up or put-together transactions). All those transactions are business combinations regardless of whether the form of consideration given is cash, other assets, a business or a subsidiary of the entity, debt, common or preferred shares or other equity interests, or a combination of those forms and regardless of whether the former owners of one of the combining entities as a group retain or receive a majority of the voting rights of the combined entity.

Indian Position: Generally, amalgamations fall into two broad categories. In the first category are those amalgamations where there is a genuine pooling not merely of the assets and liabilities of the amalgamating companies but also of the shareholders' interests and of the businesses of these companies. Such amalgamations are amalgamations which are in the nature of 'merger' and the accounting treatment of such amalgamations should ensure that the resultant figures of assets, liabilities, capital and reserves more or less represent the sum of the relevant figures of the amalgamating companies. In the second category are those amalgamations which are in effect a mode by which one company acquires another company and, as a consequence, the shareholders of the company which is acquired normally do not continue to have a proportionate share in the equity of the combined company, or the business of the company which is acquired is not intended to be continued. Such amalgamations are amalgamations in the nature of 'purchase'.

Method of Accounting

US Position: All combinations are accounted applying the Purchase Method, whereby the consideration paid by the acquiring entity as well as the assets acquired and liabilities assumed are considered at fair value. The difference between the consideration paid and assets acquired/liabilities assumed result in either Goodwill or an excess of assets acquired/ liabilities assumed over consideration paidIndian Position: Amalgamations in the nature of merger are accounted for by applying Pooling of Interest method, whereby the assets, liabilities and reserves of the transferor company are recorded by the transferee company at their existing carrying amounts after making the adjustments, if any for conflicting accounting policies.

All other amalgamations are accounted for applying the Purchase Method, which is similar to US position.

1e page 35


Treatment of Goodwill/ Negative Goodwill

US Position:

Goodwill once recognized is tested for impairment every year and impairment loss is provided for.

That excess of fair value of net assets acquired over the consideration paid (Negative Goodwill) is allocated as a pro rata reduction of the amounts that otherwise would have been assigned to all of the acquired assets except (a) financial assets other than investments accounted for by the equity method, (b) assets to be disposed of by sale, (c) deferred tax assets, (d) prepaid assets relating to pension or other postretirement benefit plans, and (e) any other current assets. If any excess remains after reducing to zero the amounts that otherwise would have been assigned to those assets, that remaining excess shall be recognized as an extraordinary gain.

Indian Position:

Goodwill is amortized over a period not exceeding five years unless a somewhat longer period can be justified.

While there is no specific guidance for Negative Goodwill or Capital Reserve, there is no practice in India to reduce the fair values of assets acquired.

1e page 36


Accounting for Retirement Benefits in the Financial Statements of Employers

Indian Position

The Indian Standard (AS-15) requires defined contribution plan wherein contribution is expensed off as accrual. Expensing the cost of defined benefit plans requires an actuarial assessment. However, the standard has no specific requirements for actuarial computations.

U.S. Position

FAS 87 requires a particular actuarial approach to be used for measuring pension cost, the projected unit credit method, and generally prescribes tightly drawn rules as to the computation of pension figures in the accounts.

Whilst the Indian Standard allows a considerable flexibility, the FASB’s requirements are much more tightly defined- the prescription of a specific actuarial method for measurement of cost, the requirement to use an insurance interest rate for valuing pension obligations and the use of current fair value for valuing pension fund assets can, conjunctively , give rise to potentially material differences.

1e page 37


Accounting for Borrowing Costs

Indian Position

Borrowing costs are interest and other costs incurred by an enterprise in connection with the borrowing of funds. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale. Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset should be capitalised as part of the cost of that asset. The amount of borrowing costs eligible for capitalisation should be determined in accordance with this Statement. Other borrowing costs should be recognised as an expense in the period in which they are incurred.

Borrowing costs are capitalised as part of the cost of a qualifying asset when it is probable that they will result in future economic benefits to the enterprise and the costs can be measured reliably. Other borrowing costs are recognised as an expense in the period in which they are incurred.

To the extent that funds are borrowed specifically for the purpose of obtaining a qualifying asset, the amount of borrowing costs eligible for capitalisation on that asset should be determined as the actual borrowing costs incurred on that borrowing during the period less any income on the temporary investment of those borrowings.

To the extent that funds are borrowed generally and used for the purpose of obtaining a qualifying asset, the amount of borrowing costs eligible for capitalisation should be determined by applying a capitalisation rate to the expenditure on that asset. The capitalisation rate should be the weighted average of the borrowing costs applicable to the borrowings of the enterprise that are outstanding during the period, other than borrowings made specifically for the purpose of obtaining a qualifying asset. The amount of borrowing costs capitalised during a period should not exceed the amount of borrowing costs incurred during that period.

The capitalisation of borrowing costs as part of the cost of a qualifying asset should commence when all the following conditions are satisfied:

(a) expenditure for the acquisition, construction or production of a qualifying asset is being incurred;(b) borrowing costs are being incurred; and(c) activities that are necessary to prepare the asset for its intended use or sale are in progress.

Expenditure on a qualifying asset includes only such expenditure that has resulted in payments of cash, transfers of other assets or the assumption of interest-bearing liabilities. Expenditure is reduced by any progress payments received and grants received in connection with the asset. The average carrying amount of the asset during a period, including borrowing costs previously capitalised,is normally a reasonable approximation of the expenditure to which the capitalisation rate is applied in that period.

US. Position

Interest cost shall be capitalized as part of the historical cost of acquiring certain assets. To qualify for interest capitalization, assets must require a period of time to get them ready for their intended use. Examples are assets that an enterprise constructs for its own use (such as facilities) and assets intended for sale or lease that are constructed as discrete projects (such as ships or real estate projects). Interest capitalization is required for those assets if its effect, compared with the effect of expensing interest, is material. If the net effect is not material, interest capitalization is not required. However, interest cannot be capitalized for inventories that are routinely manufactured or otherwise produced in large quantities on a repetitive basis, or on qualifying assets acquired using gifts or grants that are restricted by the donor or grantor to acquisition of those assets to the extent that funds are available from such gifts or grants.

In situations involving qualifying assets financed with the proceeds of restricted tax-exempt borrowings, the amount of interest cost to be capitalized shall be all interest cost of those borrowings less any interest earned on temporary investment of the proceeds of those borrowings from the date of borrowing until the specified qualifying assets acquired with those borrowings are ready for their intended use.

1e page 38


In all other situations, the interest cost eligible for capitalization shall be the interest cost recognized on borrowings and other obligations. The amount capitalized is to be an allocation of the interest cost incurred during the period required to complete the asset. The interest rate for capitalization purposes is to be based on the rates of the enterprise's outstanding borrowings. If the enterprise associates a specific new borrowing with the asset, it may apply the rate on that borrowing to the appropriate portion of the expenditures for the asset. A weighted average of the rates on other borrowings is to be applied to expenditures not covered by specific new borrowings. Judgment is required in identifying the borrowings on which the average rate is based.

The Indian policy is in line with FAS 34 and requires capitalisation of interest on borrowings invested in assets under construction during the period that they are in that state.

1e page 39

Form and Contents of Financial Statements

Whilst the Schedule VI of the Companies Act,1956 and the Accounting Standards issued by the Institute of chartered Accountants of India lay down the principles of the form and content of the financial statements, under the US GAAP the form and content is usually governed by the requirements of the various pronouncements. Following is the generic requirement of US GAAP for the form and content of the financial statements.

FORM OF BALANCE SHEET

The use of terms balance sheet, statement of financial position, or statement of financial condition denotes the use of generally accepted accounting principles. If some other comprehensive basis of accounting, such as Income Tax or cash, is used, the title of financial statement must be adjusted to reflect this variation.

Classification Of Assets

Assets, liabilities, and stockholders' equity are separated in the balance sheet so that important relationships can be shown and attention can be focused on significant subtotals.

A. Current Assets.

Per ARB 43, Chapter 3, current assets are cash and other assets or resources commonly identified as those which are reasonably expected to be realized in cash or sold or consumed during the normal operating cycle of the business. When the cycle is less than 1 year, the 1-year concept is traditionally adopted However, when the operating cycle exceeds 1 year, the operating cycle will serve a the proper measurement period for purposes of current asset classification. When the cycle is very long, the usefulness of the concept of current assets diminishes The following items would be classified as current assets:

1. Cash and cash equivalents include cash on hand consisting of coins, currency, undeposited checks; money orders and drafts; and deposits in banks. Anything accepted by a bank for deposit would be considered as cash. Cash must be available for a demand withdrawal. Assets such as certificates of deposit would not be considered cash because of the time restrictions on withdrawal. Also, cash must be available for current use in order to be classified as a current asset. Cash which is restricted in use and whose restrictions will not expire within the operating cycle or cash restricted for noncurrent use would not be included in current assets. Per SFAS 95, cash equivalents include short-term, highly liquid investments that (1) are readily convertible to known amounts of cash and (2) are so near their maturity (maturities of 3 months or less from the date of purchase by the enterprise) that they present negligible risk of changes in value because of changes in interest rates. Treasury bills, commercial paper, and money market fund are all examples of cash equivalents.

2. Short-term investments are readily marketable securities acquired through the use of temporarily idle cash. These securities are accounted for under SFAS 115. Under SFAS 115, the basis of reporting of these items need no be reported on the face of the balance sheet provided the different reporting classifications are reconciled in the notes. The balance sheet presentation would be as follows:

Marketable securities $xxx

3. Receivables include accounts and notes receivable, receivables from affiliate companies, and officer and employee receivables. The term "accounts receivable" represents amounts due from customers arising from transactions in the ordinary course of business. Allowances due to uncollectibility and any amounts discounted or pledged should be clearly stated. The allowances may be based upon a relationship to sales or based upon direct analysis of the receivables. If material, the receivables should be broken down into their component parts. The receivables section may be presented as follows:

1e page 40


Receivables:AccountsNotes

Less allowance for doubtful accounts

Affiliate companiesOfficers and employees

4. Inventories are goods on hand and available for sale. The basis of valuation and the method of pricing should be disclosed.

Inventories--at the lower of cost or market (specific identification) $xxx

In the case of a manufacturing concern, raw materials, work in process, and finished goods should be disclosed separately on the balance sheet or in the footnotes.

Inventories:Finished goodsWork in processRaw materials

5. Prepaid expenses are assets created by the prepayment of cash or incurrence of a liability. They expire and become expenses with the passage of time, usage or events (e.g., prepaid rent, prepaid insurance, and deferred taxes).

B. Long-term investments.

Investments that are intended to be held for an extended period of time (longer than one operating cycle) would be classified as available-for-sale or held-to-maturity investments under SFAS 115. The following are the three major types of long-term investments:

1. Debt and equity securities are stocks, bonds, and long-term notes. Under SFAS 115, the basis of reporting of these items is not reported on the face of the balance sheet but should be reported in the notes.

Long-term investments:Investments in A company stock Notes receivable Less discount on notes receivableInvestment in B company bonds

2. Tangible assets not currently used in operations.

3. Investments held in special funds (e.g., sinking funds, pension funds amounts held for plant expansion, and cash surrender values of life insurance policies).

C. Property, plant, and equipment.

Assets of a durable nature that are to be use in the production or sale of goods, sale of other assets, or rendering of service rather than being held for sale (e.g., machinery and equipment, buildings, furniture and fixtures, natural resources, and land). These should be disclosed with relate accumulated depreciation/depletion as follows:

1e page 41


Machinery and equipmentLess accumulated depreciationorMachinery and equipment (net of $xxxaccumulated depreciation)

Accumulated depreciation may be shown in total or by major classes of depreciable assets. In addition to showing this amount on the balance sheet, the notes to the financial statements should contain balances of major classes of depreciable assets, by nature or function, at the balance sheet date and a general description of the method or methods used in computing depreciation with respect to major classes o depreciable assets (APB 12, para 5).

D. Intangible assets.

Noncurrent, nonmaterialistic assets of a business, the possession of which provides anticipative benefits to the owner (e.g., goodwill, trademarks, patents, copyrights, organizational costs, etc.). Generally, the amortization of an intangible asset is credited directly to the asset account, although it is acceptable to use an accumulated amortization account.

E. Other assets.

An all-inclusive heading for accounts that do not fit neatly into any of the other asset categories (e.g., long-term prepaid expenses, deferred taxes, bond issue costs, noncurrent receivables, and restricted cash).

Classification Of Liabilities

The liabilities are displayed on the balance sheet in the order of payment.

A. Current liabilities.

Per ARB 43, Chapter 3, obligations whose liquidation is reasonably expected to require the use of existing resources properly classifiable as current assets, or the creation of current obligations. Obligations that are due on demand or which are callable at any time by the lender are classified as current regardless of the intent of the entity or lender.

1. Obligations arising from the acquisition of goods and services entering the operating cycle (e.g., accounts payable, short-term notes payable, wages payable, taxes payable, and other miscellaneous payables).

2. Collections of money in advance for the future delivery of goods or performance of services, such as rent received in advance and unearned subscription revenues.

3. Other obligations maturing within the current operating cycle to be met through the use of current assets, such as the current maturity of bonds, and long-term notes.

In two cases, obligations to be paid in the next period should not be classified as current liabilities. Debt expected to be refinanced through another long-term issue and debt that will be retired through the use of noncurrent assets, such as a bond sinking fund, are treated as noncurrent liabilities because the liquidation does not require the use of current assets or the creation of other current liabilities.

The distinction between current and noncurrent liquid assets and liabilities generally rests upon both the ability of the entity and the intent of the entity to liquidate or not to liquidate within the traditional 1-year concept.

1e page 42


B. Noncurrent liabilities.

Obligations that are not expected to be liquidated within the current operating cycle.

1. Obligations arising through the acquisition of assets, such as the issuance of lasses of bonds, long-term notes, and lease obligations.

2. Obligations arising out of the normal course of operations, such as pension obligations.3. Contingent obligations involving uncertainty as to. possible losses. These are resolved by the occurrence

or nonoccurrence of one or more future events that confirm the amount payable, the payee, and/or the date payable, such as product warranties

On all long-term liabilities the maturity date, nature of obligation, rate of interest, and any security pledged to support the agreement should be clearly shown. Also, on bonds and long-term notes, any premium or discount should be reported separately as an addition to or subtraction from the bond or note. Long-term obligations where certain covenants exist are classified as current liabilities if any of those covenants have been violated and the lender has the right to demand payment. Unless the lender expressly waives that right or the conditions causing the default are corrected, the obligation is current.

C. Other liabilities.

Items that do not meet the definition of a liability, such as deferred income taxes or deferred investment tax credits. Many times these items will be included in current or noncurrent liabilities even though they technically are not similar.

D. Offsetting

Offsetting assets and liabilities. In general, assets and liabilities are not offset against each other. The reduction of accounts receivable by the allowance for doubtful accounts or property, plant, and equipment by the accumulated depreciation are acts which reduce these assets by the appropriate valuation accounts. The right of setoff must exist for the offsetting in the financial statements to be a proper presentation. This right of setoff exists only when all the following conditions are met:

1. Each of the two parties owes the other determinable amounts (although they may be in different currencies and bear different rates of interest).

2. The entity has the right to setoff against the amount owed by the other party.3. The entity intends to offset.4. The right of setoff is legally enforceable.

In particular cases, state laws or bankruptcy laws may impose restrictions o prohibitions against the right of setoff. Furthermore, when maturities differ, only the party with the nearest maturity can offset because the party with the longer maturity must settle in the manner determined by the earlier maturity party.

The offsetting of cash or other assets against a tax liability or other amounts due to governmental bodies is also not acceptable except under limited circumstances The only exception is when it is clear that the purchase of securities is in substance an advance payment of taxes payable in the near future and that the securities are acceptable for the payment of taxes. Primarily this occurs as an accommodation t governmental bodies.

For forwards, interest rate swaps, currency swaps, options, and other conditional or exchange contracts, the conditions for the right of offset must exist or the fair value of contracts in a loss position cannot be offset against the fair value o contracts in a gain position. Neither can accrued receivable amounts be offs against accrued payable amounts. If, however, there is a master netting arrangement, then fair value amounts recognized for forwards, interest or currency swap options, or other such contracts may be offset without respect to the condition previously specified.

1e page 43


E. Classification of Stockholders' Equity

Stockholders' equity is the interest of the stockholders in the assets of a corporation. It shows the cumulative net results of past transactions and other events.

Capital stock.

Stock which consists of the par/stated value of preferred common shares. The number of shares authorized, the number issued, and number outstanding should be clearly shown. For preferred stock, the preference and features must also be stated as follows:

6% cumulative preferred stock, $100 par value, callable at $115,10,000 shares authorized and outstanding $xxxCommon stock, $10 par value per share, 2,000,000 shares authorized, 1,500,000 shares issued and outstanding $xxx

Preferred stock which is redeemable at the option of the holder is not considered to be part of equity, but is usually shown in a separate caption between liabilities and equity.

Additional paid-in capital.

There are two major categories of additional paid-in capital.

1. Paid-in capital in excess of par/stated value which is the difference between the actual issue price and par/stated value. Amounts in excess should be disclosed separately for common stock and each issue of preferred stock as follows:

Additional paid-in capital--6% preferred stockAdditional paid-in capital--common stock

2. Paid-in capital from other transactions which includes treasury stock, retirement of stock, stock dividends recorded at market, lapse of stock purchase warrants, conversion of convertible bonds in excess of the par value of the stock, and any other additional capital from the company's own stock transactions.

F. Donated capital.

Donations of a. noncash variety from either stockholders or outside parties, such as land securities, buildings, and equipment.

G. Retained earnings.

Accumulated earnings not distributed to the shareholders.

1. Appropriated, a certain amount of retained earnings that are not to be distributed to stockholders as dividends.

2. Unappropriated, earnings available to be distributed as dividends.

A balance sheet disclosure should reveal the pertinent provisions, source of restriction, amount subject to restriction, and restrictions on other items, such as working capital and additional borrowings. If a company appropriated retained earnings to satisfy bond indebtedness, the presentation would be as follows:

Retained earnings:

Appropriated for bond indebtedness $xxxFree and unappropriated $xxx

1e page 44


Many corporations do not record the restrictions in appropriated and unappropriated accounts but merely explain the restrictions in the footnotes because financial statement users often believe the appropriation is held as cash. Also included in the equity section of the balance sheet is treasury stock representing issued shares reacquired by the issuer. These are generally stated at their cost of acquisition and as a reduction of shareholders' equity.

H. Accumulated other comprehensive income

Its components including net unrealized holding gains and losses on investments classified as available-for-sale securities (SFAS 115), the excess of minimum pension liability over unrecognized prior service cost, and unrealized gains (losses) on foreign currency translations shall be shown either in the statement of changes in stockholders' equity or in the stockholders' equity section

Stockholders' equityCommon stockPaid in capitalRetained earnings

Accumulated other comprehensive incomeForeign currency translation adjustmentsPension liability adjustmentUnrealized gains on securities

Total stockholders' equity

Accounting policies.

There are many different methods of valuing assets assigning costs. Financial statement users must be aware of the accounting policies used by enterprises so that sound economic decisions can be made. Per APB 22, disclosures should identify and describe the accounting principles followed by entity and methods of applying those principles that materially affect the deter nation of financial position, changes in cash flows, or results of operations. accounting policies should encompass those accounting principles and methods involve the following:

1. Selection from acceptable alternatives2. Principles and methods peculiar to the industry3. Unique applications of GAAP

Related parties.

According to SFAS 57, Related Party Disclosures, financial statements should include disclosure of material related party transactions other than compensation arrangements, expense allowances, or other similar items in the ordinary course of business. A related party is essentially any party that controls or can significantly influence the management or operating policies of the company to the extent that the company may be prevented from fully pursuing its own interests. Such groups would include affiliates, investees accounted for by the equity method, trusts for the benefit of employees, principal owners, management, and immediate family members of owners or management.

Disclosures should take place even if there is no accounting recognition made for such transactions (e.g., a service is performed without payment). Disclosures should generally not imply that such related party transactions were on terms essentially equivalent to arm's-length dealings. Additionally, when one or more companies are under common control such that the financial statements might vary from those that would have been obtained if the companies were autonomous, the nature of the control relationship should be disclosed even if there are no transactions between the companies.

The disclosures generally should include1. Nature of relationship.2. Description of transactions and effects of such transactions on the financial statements for each period for

which an income statement is presented.3. Dollar amount of transactions for each period for which an income statement is presented and effects of

any change in establishing the terms of such transactions differently than that used in prior periods.

1e page 45


4. Amounts due to and from such related parties as of the date of each balance sheet presented together with the terms and manner of settlement.

Comparative statements.

In order to increase the usefulness of financial statements, many companies include in their annual reports 5 or 10-year summaries of condensed financial information. These comparative statements allow investment analysts and other interested readers to perform comparative analysis of pertinent information. ARB 43, Chapter 2 states the presentation of comparative financial statements in annual reports enhances the usefulness of such reports and brings out more clearly the nature and trends of current changes affecting the enterprise. Such presentation emphasizes the fact that the statements for a series of periods are far more significant than those for a single period and that the accounts for one period are but an installment of what is essentially a continuous history.

Subsequent events.

The balance sheet is dated as of the last day of the fiscal period, but a period of time may elapse before the financial statements are issued. During this period, significant events or transactions may have occurred that materially affect the company's financial position. These events and transactions are called subsequent events. Significant events occurring between the balance sheet date and issue date could make the financial statements misleading if not disclosed.

There are two types of subsequent events (SAS 1, Subsequent Events). The first type consists of those events that provide additional evidence with respect the conditions that existed at the date of the balance sheet and affect the estimates inherent in the process of preparing financial statements. The second type consists o those events that provide evidence with respect to conditions that did not exist at the date of the balance sheet being reported on but arose subsequent to that date. Th first type results in adjustments of the financial statements. The second type dose not require adjustment of the financial statements but may require disclosure in order to keep the financial statements from being misleading. Disclosure can be made in the form of footnotes, supporting schedules, and pro forma statements.

Contingencies.

A contingency is defined in SFAS 5 as an existing condition, situation, or set of circumstances involving uncertainty as to possible gain or loss to an enterprise that will ultimately be resolved when one or more future events occur or fail to occur. Resolution of the uncertainty may confirm the acquisition of an asset, the reduction of a liability, the loss or impairment of an asset, or the incurrence of a liability.

An estimated loss from a loss contingency shall be accrued by a charge to income and the recording of a liability if both of the following conditions are met (SFAS 5, para 8):

1. Information available prior to issuance of the financial statements indicates that it is probable that an asset had been impaired or a liability had been incurred at the date of the financial statements.

2. The amount of loss can be reasonably estimated.

The likelihood of a loss on a contingency may be broken down into the following three classifications (SFAS 5, para 3):

a. Probable, the future event or events are likely to occur.b. Reasonably possible, the chance of the future event or events occurring is more than remote but less than

likely.c. Remote, the chance of the future event or events occurring is slight.

If the loss contingency is probable but only a range of estimated values can be made, the minimum point of the range should be accrued and the maximum point should be disclosed. If the loss contingency is at least reasonably possible, a liability should not be recorded but disclosure is required. If feasible, that disclosure should include an estimate of the loss or range of loss. If a reasonable estimate of the loss cannot be made, that fact should be disclosed.

1e page 46


An estimated gain from a gain contingency usually is not reflected in the ac counts since to do so might be to recognize revenue prior to its realization. Adequate disclosure of the gain contingency shall be made, but care must be taken t avoid misleading implications as to the likelihood of realization.

Contracts and negotiations.

All significant contractual agreements and negotiations should be disclosed in the footnotes to the financial statements. For example, lease contract provisions, pension obligations, requirements contracts, bon indenture covenants, and stock option plans should be clearly disclosed in the footnotes.

Risks and Uncertainties

AICPA Statement of Position 94-6 Disclosure of Certain Significant Risks an Uncertainties requires disclosure in financial statements about the risks and uncertainties existing as of the date of those statements. The four areas of disclosure are

1. Nature of operations

a. Major products/services and principal markets servedb. Industries operating within and relative importance of each industry including basis of

determination (assets, revenue or earnings).

NOTE: Quantification not required and words such as predominantly, equal major, or other may be used.

2. Use of estimates in preparation of financial statements

a. This fact must be disclosed as an explanation that management must use estimatesb. Purpose is to clearly alert users to pervasiveness of estimates

3. Certain significant estimates

a. Potential impact of estimates to value assets, liabilities, gains or losseswhen

(1) Reasonably possible the estimate will change in the near term(2) Effect of change would be material to financial statements

NOTE: Near term is defined as not to exceed 1 year from date of financial statements.

b. This is not a change in SFAS 5, Accounting for Contingenciesc. Disclosure of factors causing the estimate to be sensitive to change is encouraged, but not

requiredd. Materiality is measured by the effect of using a different estimate would have on the financial

statements

4. Current vulnerability due to concentrations

a. Before issuance of financial statements, management knows that concentrations

(1) Exist at balance sheet date(2) Make entity vulnerable to risk of near term severe impact(3) Reasonably possible events could cause severe impact in near future

NOTE: Severe impact is defined as higher than materiality and would equally, have a significant financially disruptive effect on the normal functioning of the entity.

1e page 47


b. Examples are concentrations in

1. Volume of business transacted with a particular customer, supplier, lender, grantor, or contributor

2. Revenue from particular products, services, or fund-raising events3. Available sources of supply of materials, labor, or services, or of licenses or other rights

used in the entity's operations4. Market or geographical area in which an entity conducts its operations

c. Disclose the percentage of labor covered by a collective bargaining agreement and the percentage covered whose agreement expires within 1 year.

d. Describe for operations outside of home country, the carrying value of net assets and location

Balance Sheet Format

The format of a balance sheet is not specified by any technical pronouncement but has become established as a matter of tradition and, in some circumstances, industry practices. In general, the two types of format are the report form and the account form. In the report form the balance sheet continues line by line from top to bottom as follows:

Assets $xxxLiabilities $xxxStockholders' equity xxxTotal liabilities and stockholders' equity $xxxxxx

In the account form the balance sheet appears in a balancing concept with asset on the left and liabilities and equity amounts on the right as follows:

Assets $xxx Liabilities xxx Stockholders' equity xxxTotal assets xxx Total liabilities & stockholders' equity xxx

1e page 48


FORM OF INCOME STATEMENT

There are two generally accepted formats for the presentation of income from continuing operations: the single step and multiple step forms.

In the single-step form, items are classified into two groups: revenues and expenses. The operating revenues and other revenues are itemized and summed to determine total revenues. The cost of goods sold, operating expenses, and other expenses are itemized and summed to determine total expenses. The total expenses (including income taxes) are deducted from the total revenues to get net income( this title will vary depending upon the occurrence of discontinued operations, extraordinary items, or accounting changes).

Example of single-step Income statement format

ABC CompanyIncome Statement

For the year Ended 12/31/2001

Revenues:

Sales (net of discounts and returns and allowances)Gain on sale of equipmentInterest incomeDividend income

Expenses:Cost of goods soldSelling expensesGeneral and administrative expensesInterest expense

Income before unusual or infrequent items and income taxesUnusual or infrequent items:Loss on sale of equipment

Income before income taxesIncome taxes

Net incomeEarnings per share

Many accountants believe that intermediate groups and subtotals show significant relationships that assist in interpreting the income statement and advocate a multiple-step format. They believe that income statement users may be misled when operating and non-operating activities are combined in a single-step income statement. In a multiple-step income statement, operating revenues and expenses are separated from non-operating revenues and expenses to provide more information concerning the firm's primary activities. This format breaks the revenue and expense items into various intermediate income components so that important relationships can be shown and attention can be focused on significant subtotals.

Example of a multiple-step income statement formatABC Company

Income StatementFor the Year Ended 12/31/2001

Sales:

SalesLess: Sales discountsSales returns and allowancesNet sales

Cost of goods sold:Inventory, 1/1/99PurchasesAdd transportation-in

1e page 49


Total cost of purchasesLess: Purchase discountPurchase returns and allowancesNet purchasesCost of goods available for saleLess inventory, 12/31/99Cost of goods soldGross profit

Operating expenses:Selling expenses

Sales salariesCommissionsAdvertising expenseDelivery expenseSelling supplies expenseDepreciation of store furniture and equipment

General and administrative expensesOfficers' salaries Office salariesBad debts expenseOffice supplies expenseDepreciation of office furniture and fixturesDepreciation of buildingInsurance expenseUtilities expense

Total operating expenseOperating incomeOther revenues:

Dividend incomeinterest income

Other expenses'.Interest expense

Income before unusual Or infrequent items and income taxUnusual or infrequent items:

Write-down of inventory to marketLoss from permanent impairment of value of manufacturing facilities

Income from operations before income taxesProvision for income tax

Net incomeEarnings per share

1e page 50

References

ARB Description

ARB 43 Restatement and Revision of Accounting Research BulletinsARB 44 Declining-balance Depreciation ARB 45 Long-Term Construction-Type Contracts ARB 46 Discontinuance of Dating Earned Surplus ARB 47 Accounting for Costs of Pension Plans ARB 48 Business Combinations ARB 49 Earnings per Share ARB 50 Contingencies ARB 51 Consolidated Financial Statements

1e page 51

References

APS Description

APS 1 Statement by the Accounting Principles Board APS 2 Disclosure of Supplemental Financial Information by Diversified Companies APS 3 Financial Statements Restated for General Price-Level Changes APS 4 Basic Concepts and Accounting Principles Underlying Financial Statements of Business

Enterprises

1e page 52

References

APB DescriptionAPB 1 New Depreciation Guidelines and Rules APB 2 Accounting for the "Investment Credit" APB 3 The Statement of Source and Application of Funds APB 4 Reporting of Leases in Financial Statements of Lessee APB 5 Accounting for the "Investment Credit" APB 6 Status of Accounting Research Bulletins APB 7 Accounting for Leases in Financial Statements of Lessors APB 8 Accounting for the Cost of Pension Plans APB 9 Reporting the Results of Operations APB 10 Omnibus Opinion--1966 – Consolidated Financial Statements, Poolings of Interest,

Restatement of Financial Statements, Tax Allocation Accounts, Discounting Offsetting Securities Against Taxes Payable, Convertible Debt and Debt Issued with Stock Warrants, Liquidation Preference of Preferred Stock, Installment Method of Accounting

APB 11 Accounting for Income Taxes APB 12 Omnibus Opinion--1967 - Classification and Disclosure of Allowances, Disclosure of

Depreciable Assets and Depreciation, Deferred Compensation Contracts, Capital Changes, Convertible Debt and Debt Issued with Stock Warrants, Amortization of Debt Discount and Expense or Premium

APB 13 Amending Paragraph 6 of APB Opinion No. 9, Application to Commercial Banks APB 14 Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants APB 15 Earnings per Share APB 16 Business Combinations APB 17 Intangible Assets APB 18 The Equity Method of Accounting for Investments in Common Stock APB 19 Reporting Changes in Financial Position APB 20 Accounting Changes APB 21 Interest on Receivables and Payables APB 22 Disclosure of Accounting Policies APB 23 Accounting for Income Taxes--Special Areas APB 24 Accounting for Income Taxes--Investments in Common Stock Accounted for by the Equity

Method APB 25 Accounting for Stock Issued to Employees APB 26 Early Extinguishment of Debt APB 27 Accounting for Lease Transactions by Manufacturer or Dealer Lessors APB 28 Interim Financial Reporting APB 29 Accounting for Nonmonetary Transactions APB 30 Reporting the Results of Operations--Discontinued Events and Extraordinary Items APB 31 Disclosure of Lease Commitments by Lessees

1e page 53

References

AIN DescriptionAIN-ARB 43 Compensation Involved in Stock Option and Stock Purchase Plans- Unofficial

Interpretations of ARB No. 43, Ch. 13B AIN-Key-Man Life Deferred Compensation Contracts- Unofficial Accounting Interpretations AIN-ARB 51 Consolidated Financial Statements- Accounting Interpretations of ARB No. 51 AIN-APB 4 Accounting for the Investment Credit- Accounting Interpretations of APB Opinion

No. 4 AIN-APB 7 Accounting for Leases in Financial Statements of Lessors- Accounting

Interpretations of APB Opinion No. 7 AIN-APB 8 Accounting for the Cost of Pension Plans- Accounting Interpretations of APB

Opinion No. 8 AIN-APB 9 Reporting the Results of Operations- Unofficial Accounting Interpretations of

APB Opinion No. 9 AIN-APB 11 Accounting for Income Taxes- Accounting Interpretations of APB Opinion No. 11 AIN-APB 15 Computing Earnings per Share- Accounting Interpretations of APB Opinion No.

15 AIN-APB 16 Business Combinations- Accounting Interpretations of APB Opinion No. 16AIN-APB 17 Intangible Assets- Unofficial Accounting Interpretations of APB Opinion No. 17 AIN-APB 18 The Equity Method of Accounting for Investments in Common Stock-

Interpretations of APB Opinion No. 18 AIN-APB 19 Reporting Changes in Financial Position- Accounting Interpretations of APB

Opinion No. 19 AIN-APB 20 Accounting Changes- Accounting Interpretations of APB Opinion No. 20 AIN-APB 21 Interest on Receivables and Payables- Accounting Interpretations of APB Opinion

No. 21 AIN-APB 22 Disclosure of Accounting Policies- Accounting Interpretations of APB Opinion No.

22 AIN-APB 23 Accounting for Income Taxes - Special Areas- Accounting Interpretations of APB

Opinion No. 23AIN-APB 25 Accounting for Stock Issued to Employees- Accounting Interpretations of APB

Opinion No. 25AIN-APB 26 Early Extinguishment of Debt- Accounting Interpretations of APB Opinion No. 26 AIN-APB 30 Reporting the Results of Operations- Accounting Interpretations of APB Opinion

No. 30

1e page 54

References

SFAC DescriptionSFAC 1 Objectives of Financial Reporting by Business Enterprises SFAC 2 Qualitative Characteristics of Accounting Information SFAC 3 Elements of Financial Statements of Business Enterprises (Superceded by SFAC 6)SFAC 4 Objectives of Financial Reporting by Nonbusiness Organizations SFAC 5 Recognition and Measurement in Financial Statements of Business Enterprises SFAC 6 Elements of Financial StatementsSFAC 7 Using Cash Flow Information and Present Value in Accounting Measurements

1e page 55

References

FAS DescriptionFAS 1 Disclosure of Foreign Currency Translation Information FAS 2 Accounting for Research and Development Costs FAS 3 Reporting Accounting Changes in Interim Financial Statements FAS 4 Reporting Gains and Losses from Extinguishment of Debt FAS 5 Accounting for Contingencies FAS 6 Classification of Short-Term Obligations Expected to Be Refinanced FAS 7 Accounting and Reporting by Development Stage Enterprises FAS 8 Accounting for the Translation of Foreign Currency Transactions and Foreign Currency

Financial Statements FAS 9 Accounting for Income Taxes--Oil and Gas Producing Companies FAS 10 Extension of "Grandfather" Provisions for Business Combinations FAS 11 Accounting for Contingencies--Transition Method FAS 12 Accounting for Certain Marketable Securities FAS 13 Accounting for Leases FAS 14 Financial Reporting for Segments of a Business Enterprise FAS 15 Accounting by Debtors and Creditors for Troubled Debt Restructurings FAS 16 Prior Period Adjustments FAS 17 Accounting for Leases--Initial Direct Costs FAS 18 Financial Reporting for Segments of a Business Enterprise--Interim Financial Statements FAS 19 Financial Accounting and Reporting by Oil and Gas Producing Companies FAS 20 Accounting for Forward Exchange Contracts FAS 21 Suspension of the Reporting of Earnings per Share and Segment Information by Nonpublic

Enterprises FAS 22 Changes in the Provisions of Lease Agreements Resulting from Refundings of Tax-Exempt

Debt FAS 23 Inception of the Lease FAS 24 Reporting Segment Information in Financial Statements That Are Presented in Another

Enterprise's Financial Report an amendment of FASB Statement No. 14 FAS 25 Suspension of Certain Accounting Requirements for Oil and Gas Producing Companies FAS 26 Profit Recognition on Sales-Type Leases of Real Estate FAS 27 Classification of Renewals or Extensions of Existing Sales-Type or Direct Financing

Leases FAS 28 Accounting for Sales with Leasebacks FAS 29 Determining Contingent Rentals FAS 30 Disclosure of Information about Major Customers FAS 31 Accounting for Tax Benefits Related to U.K. Tax Legislation concerning Stock Relief FAS 32 Specialized Accounting and Reporting Principles and Practices in AICPA SOPs and Audit

and Accounting Guides FAS 33 Financial Reporting and Changing Prices FAS 34 Capitalization of Interest Cost FAS 35 Accounting and Reporting by Defined Benefit Pension Plans FAS 36 Disclosure of Pension Information FAS 37 Balance Sheet Classification of Deferred Income Taxes FAS 38 Accounting for Preacquisition Contingencies of Purchased Enterprises FAS 39 Financial Reporting and Changing Prices: Specialized Assets--Mining and Oil and GasFAS 40 Financial Reporting and Changing Prices: Specialized Assets--Timberlands and Growing

TimberFAS 41 Financial Reporting and Changing Prices: Specialized Assets--Income-Producing Real

EstateFAS 42 Determining Materiality for Capitalization of Interest Cost FAS 43 Accounting for Compensated Absences FAS 44 Accounting for Intangible Assets of Motor Carriers FAS 45 Accounting for Franchise Fee Revenue FAS 46 Financial Reporting and Changing Prices: Motion Picture Films FAS 47 Disclosure of Long-Term Obligations FAS 48 Revenue Recognition When Right of Return Exists FAS 49 Accounting for Product Financing Arrangements FAS 50 Financial Reporting in the Record and Music Industry

1e page 56

References

FAS 51 Financial Reporting by Cable Television Companies FAS 52 Foreign Currency Translation FAS 53 Financial Reporting by Producers and Distributors of Motion Picture Films FAS 54 Financial Reporting and Changing Prices: Investment CompaniesFAS 55 Determining whether a Convertible Security Is a Common Stock Equivalent FAS 56 Designation of AICPA Guide and SOP 81-1and SOP 81-2 as Preferable for Purposes of

applying APB Opinion 20 FAS 57 Related Party Disclosures FAS 58 Capitalization of Interest Cost in Financial Statements That Include Investments

Accounted for by the Equity Method FAS 59 Deferral of the Effective Date of Certain Accounting Requirements for Pension Plans of

State and Local Govt. Units FAS 60 Accounting and Reporting by Insurance Enterprises FAS 61 Accounting for Title Plant FAS 62 Capitalization of Interest Cost in Situations Involving Certain Tax-Exempt Borrowings and

Certain Gifts and Grants FAS 63 Financial Reporting by Broadcasters FAS 64 Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements FAS 65 Accounting for Certain Mortgage Banking Activities FAS 66 Accounting for Sales of Real Estate FAS 67 Accounting for Costs and Initial Rental Operations of Real Estate Projects FAS 68 Research and Development Arrangements FAS 69 Disclosures about Oil and Gas Producing Activities FAS 70 Financial Reporting and Changing Prices: Foreign Currency TranslationFAS 71 Accounting for the Effects of Certain Types of Regulation FAS 72 Accounting for Certain Acquisitions of Banking or Thrift Institutions FAS 73 Reporting a Change in Accounting for Railroad Track Structures FAS 74 Accounting for Special Termination Benefits Paid to Employees FAS 75 Deferral of the Effective Date of Certain Accounting Requirements for Pension Plans of

State and Local Govt. Units FAS 76 Extinguishment of Debt FAS 77 Reporting by Transferors for Transfers of Receivables with Recourse FAS 78 Classification of Obligations That Are Callable by the Creditor FAS 79 Elimination of Certain Disclosures For Business Combinations by Nonpublic Enterprises FAS 80 Accounting for Futures Contracts FAS 81 Disclosure of Postretirement Health Care and Life Insurance Benefits FAS 82 Financial Reporting and Changing Prices: Elimination of Certain DisclosuresFAS 83 Designation of Certain AICPA Guides and Statement of Position as Preferable for

Purposes of Applying APB Opinion 20 FAS 84 Induced Conversions of Convertible Debt FAS 85 Yield Test for Determining whether a Convertible Security Is a Common Stock Equivalent FAS 86 Accounting for the Costs of Computer Software to Be Sold, Leased, or Otherwise

Marketed FAS 87 Employers' Accounting for Pensions FAS 88 Employers' Accounting for Settlements & Curtailments of Defined Benefit Pension Plans

and for Termination Benefits FAS 89 Financial Reporting and Changing Prices FAS 90 Regulated Enterprises--Accounting for Abandonments and Disallowances of Plant Costs FAS 91 Nonrefundable Fees & Costs Associated with Originating or Acquiring Loans and Initial

Direct Costs of LeasesFAS 92 Regulated Enterprises--Accounting for Phase-in Plans FAS 93 Recognition of Depreciation by Not-for-Profit Organizations FAS 94 Consolidation of All Majority-Owned Subsidiaries FAS 95 Statement of Cash Flows FAS 96 Accounting for Income Taxes FAS 97 Accounting by Insurance Cos. for Certain Long-Duration Contracts & Realized Gains &

Losses on Investment Sales FAS 98 Accounting for Leases FAS 99 Deferral of the Effective Date of Recognition of Depreciation by Not-for-Profit

Organizations

1e page 57

References

FAS 100 Accounting for Income Taxes--Deferral of the Effective Date of FASB Statement No. 96 FAS 101 Regulated Enterprises--Accounting for the Discontinuation of Application of FASB

Statement No. 71 FAS 102 Statement of Cash Flows--Exemption of Certain Enterprises and Classification of Cash

Flows from Certain Securities Acquired for Resale FAS 103 Accounting for Income Taxes--Deferral of the Effective Date of FASB Statement No. 96 FAS 104 Statement of Cash Flows--Net Reporting of Certain Cash Receipts and Cash Payments and

Classification of Cash Flows from Hedging Transactions FAS 105 Disclosure of Information about Financial Instruments with Off-Balance-Sheet Risk and

Concentrations of Credit Risk FAS 106 Employers' Accounting for Postretirement Benefits Other Than Pensions FAS 107 Disclosures about Fair Value of Financial Instruments FAS 108 Accounting for Income Taxes--Deferral of the Effective Date of FASB Statement No. 96 FAS 109 Accounting for Income Taxes FAS 110 Reporting by Defined Benefit Pension Plans of Investment Contracts FAS 111 Rescission of FASB Statement No. 32 and Technical Corrections FAS 112 Employers' Accounting for Postemployment Benefits FAS 113 Accounting and Reporting for Reinsurance of Short-Duration and Long-Duration Contracts FAS 114 Accounting by Creditors for Impairment of a Loan FAS 115 Accounting for Certain Investments in Debt and Equity Securities FAS 116 Accounting for Contributions Received and Contributions Made FAS 117 Financial Statements of Not-for-Profit Organizations FAS 118 Accounting by Creditors for Impairment of a Loan-- Income Recognition and Disclosures FAS 119 Disclosure about Derivative Financial Instruments and Fair Value of Financial Instruments FAS 120 Accounting and Reporting by Mutual Life Insurance Enterprises and by Insurance

Enterprises for Certain Long-Duration Participating Contracts FAS 121 Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be

Disposed Of FAS 122 Mortgage Servicing Rights FAS 123 Accounting for Stock-Based Compensation FAS 124 Accounting for Certain Investments Held by Not-for-Profit Organizations FAS 125 Accounting for Transfers and Servicing of Financial Assets and Extinguishments of

Liabilities FAS 126 Exemption from Certain Required Disclosures about Financial Instruments for Certain

Nonpublic Entities FAS 127 Deferral of the Effective Date of Certain Provisions of FASB Statement No. 125 FAS 128 Earnings per Share FAS 129 Disclosure of Information about Capital Structure FAS 130 Reporting Comprehensive Income FAS 131 Disclosures about Segments of an Enterprise and Related Information FAS 132 Employers’ Disclosures about Pensions and Other Postretirement BenefitsFAS 133 Accounting for Derivative Instruments and Hedging ActivitiesFAS 134 Accounting for Mortgage-Backed Securities Retained after the Securitization of Mortgage

Loans Held for Sale by a Mortgage Banking EnterpriseFAS 135 Rescission of FASB Statement No. 75 and Technical CorrectionsFAS 136 Transfers of Assets to a Not-for-Profit Organization or Charitable Trust That Raises or

Holds Contributions for OthersFAS 137 Accounting for Derivative Instruments and Hedging Activities—Deferral of the Effective

Date of FASB Statement No. 133 (an amendment of FASB Statement No. 133)FAS 138 Accounting for Certain Derivative Instruments and Certain Hedging Activities (an

amendment of FASB Statement No. 133)FAS 139 Rescission of FASB Statement No. 53 and amendments to FASB Statements No. 63, 89,

and 121FAS 140 Accounting for Transfers and Servicing of Financial Assets and Extinguishments of

Liabilities (a replacement of FASB Statement 125)FAS 141 Business CombinationsFAS 142 Goodwill and Other Intangible AssetsFAS 143 Accounting for Asset Retirement ObligationFAS 144 Accounting for Impairment or Disposal of Long-Lived AssetsFAS 145 Rescission of FASB Statements No. 4, 44 and 64, amendment of FASB Statement No. 13,

1e page 58

References

and Technical Correction FAS 146 Accounting for Costs Associated with Exit or disposalFAS 147 Acquitions of Certain Financial Institutions – An amendment to FASB 72 & 144FAS 148 Accounting for Stock based Compensation- Transition and DisclosureFAS 149 Amendment of Statement 133 on Derivative Instruments and Hedging ActivitiesFAS 150 Acquitions of Certain Financial Institutions with characteristics of both Liabilities and

Equity

1e page 59

References

FIN DescriptionFIN 1 Accounting Changes Related to the Cost of Inventory

FIN 2 Imputing Interest on Debt Arrangements Made under the Federal Bankruptcy Act

FIN 3 Accounting for the Cost of Pension Plans Subject to the Employee Retirement Income Security Act of 1974

FIN 4 Applicability of FASB Statement No. 2 to Business Combinations Accounted for by the Purchase Method

FIN 5 Applicability of FASB Statement No. 2 to Development Stage Enterprises FIN 6 Applicability of FASB Statement No. 2 to Computer Software FIN 7 Applying FASB Statement No. 7 in Financial Statements of Established Operating

Enterprises FIN 8 Classification of a Short-Term Obligation Repaid Prior to Being Replaced by a Long-Term

Security FIN 9 Applying APB Opinions No. 16 and 17 When a Savings and Loan Association or a Similar

Institution Is Acquired in a Business Combination Accounted for by the Purchase Method FIN 10 Application of FASB Statement No. 12 to Personal Financial Statements FIN 11 Changes in Market Value after the Balance Sheet Date FIN 12 Accounting for Previously Established Allowance Accounts FIN 13 Consolidation of a Parent and Its Subsidiaries Having Different Balance Sheet Dates FIN 14 Reasonable Estimation of the Amount of a Loss FIN 15 Translation of Unamortized Policy Acquisition Costs by a Stock Life Insurance Company FIN 16 Clarification of Definitions and Accounting for Marketable Equity Securities That Become

Nonmarketable FIN 17 Applying the Lower of Cost or Market Rule in Translated Financial Statements FIN 18 Accounting for Income Taxes in Interim Periods FIN 19 Lessee Guarantee of the Residual Value of Leased Property FIN 20 Reporting Accounting Changes under AICPA Statements of Position FIN 21 Accounting for Leases in a Business Combination FIN 22 Applicability of Indefinite Reversal Criteria to Timing Differences FIN 23 Leases of Certain Property Owned by a Governmental Unit or Authority FIN 24 Leases Involving Only Part of a Building FIN 25 Accounting for an Unused Investment Tax Credit FIN 26 Accounting for Purchase of a Leased Asset by the Lessee during the Term of the Lease FIN 27 Accounting for a Loss on a Sublease FIN 28 Accounting for Stock Appreciation Rights and Other Variable Stock Option or Award Plans FIN 29 Reporting Tax Benefits Realized on Disposition of Investments in Certain Subsidiaries and

Other Investees FIN 30 Accounting for Involuntary Conversions of Nonmonetary Assets to Monetary Assets FIN 31 Treatment of Stock Compensation Plans in EPS Computations FIN 32 Application of Percentage Limitations in Recognizing Investment Tax Credit FIN 33 Applying FASB Statement No. 34 to Oil and Gas Producing Operations Accounted for by

the Full Cost MethodFIN 34 Disclosure of Indirect Guarantees of Indebtedness of Others FIN 35 Criteria for Applying the Equity Method of Accounting for Investments in Common Stock FIN 36 Accounting for Exploratory Wells in Progress at the End of a Period FIN 37 Accounting for Translation Adjustments upon Sale of Part of an Investment in a Foreign

Entity FIN 38 Determining the Measurement Date for Stock Option, Purchase, and Award Plans Involving

Junior Stock FIN 39 Offsetting of Amounts Related to Certain Contracts FIN 40 Applicability of Generally Accepted Accounting Principles to Mutual Life Insurance and

Other Enterprises FIN 41 Offsetting of Amounts Related to Certain Repurchase and Reverse Repurchase Agreements FIN 42 Accounting for Transfers of Assets in Which a Not-for-Profit Organization Is Granted

Variance PowerFIN 43 Real Estate Sales (an interpretation of FASB Statement No. 66)FIN 44 Accounting for certain transactions involving Stock compensation

1e page 60

References

FIN 45 Gurantor’s Accounting and Disclosure Requirements for Gurantees , including indirect guarantees of indebtedness of others.

FIN 46 Consolidation of variable interest entities.

1e page 61

References

FTB DescriptionFTB 79-1 Purpose and Scope of FASB Technical Bulletins and Procedures for Issuance FTB 79-2 Computer Software Costs FTB 79-3 Subjective Acceleration Clauses in Long-Term Debt AgreementsFTB 79-4 Segment Reporting of Puerto Rican Operations FTB 79-5 Meaning of the Term "Customer" as It Applies to Health Care Facilities under FASB

Statement No. 14 FTB 79-6 Valuation Allowances Following Debt Restructuring FTB 79-7 Recoveries of a Previous Writedown under a Troubled Debt Restructuring Involving a

Modification of TermsFTB 79-8 Applicability of FASB Statements 21 and 33 to Certain Brokers and Dealers in

Securities FTB 79-9 Accounting in Interim Periods for Changes in Income Tax Rates FTB 79-10 Fiscal Funding Clauses in Lease Agreements FTB 79-11FTB 79-11 Effect of a Penalty on the Term of a Lease FTB 79-12 Interest Rate Used in Calculating the Present Value of Minimum Lease Payments FTB 79-13 Applicability of FASB Statement No. 13 to Current Value Financial Statements FTB 79-14 Upward Adjustment of Guaranteed Residual Values FTB 79-15 Accounting for Loss on a Sublease Not Involving the Disposal of a Segment FTB 79-16 Effect of a Change in Income Tax Rate on the Accounting for Leveraged Leases FTB 79-17 Reporting Cumulative Effect Adjustment from Retroactive Application of FASB

Statement No. 13 FTB 79-18 Transition Requirement of Certain FASB Amendments and Interpretations of FASB

Statement No. 13 FTB 79-19 Investor's Accounting for Unrealized Losses on Marketable Securities Owned by an

Equity Method InvesteeFTB 80-1 Early Extinguishment of Debt through Exchange for Common or Preferred Stock FTB 80-2 Classification of Debt Restructurings by Debtors and Creditors FTB 81-1 Disclosure of Interest Rate Futures Contracts and Forward and Standby Contracts FTB 81-2 Accounting for Unused Investment Tax Credits Acquired in a Business Combination

Accounted for by the Purchase Method FTB 81-3 Multiemployer Pension Plan Amendments Act of 1980 FTB 81-4 Classification as Monetary or Nonmonetary Items FTB 81-5 Offsetting Interest Cost to Be Capitalized with Interest Income FTB 81-6 Applicability of Statement 15 to Debtors in Bankruptcy Situations FTB 82-1 Disclosure of the Sale or Purchase of Tax Benefits through Tax Leases FTB 82-2 Accounting for the Conversion of Stock Options into Incentive Stock Options as a

Result of the Economic Recovery Tax Act of 1981 FTB 83-1 Accounting for the Reduction in the Tax Basis of an Asset Caused by the Investment

Tax Credit FTB 84-1 Accounting for Stock Issued to Acquire the Results of a Research and Development

Arrangement FTB 84-2 Accounting for the Effects of the Tax Reform Act of 1984 on Deferred Income Taxes

Relating to Domestic International Sales Corporations FTB 84-3 Accounting for the Effects of the Tax Reform Act of 1984 on Deferred Income Taxes

of Stock Life Insurance Enterprises FTB 84-4 In-Substance Defeasance of Debt FTB 85-1 Accounting for the Receipt of Federal Home Loan Mortgage Corporation Participating

Preferred Stock FTB 85-2 Accounting for Collateralized Mortgage Obligations (CMOs) FTB 85-3 Accounting for Operating Leases with Scheduled Rent Increases FTB 85-4 Accounting for Purchases of Life Insurance FTB 85-5 Issues Relating to Accounting for Business Combinations, Including FTB 85-6 Accounting for a Purchase of Treasury Shares and Costs Incurred in Defending against

a Takeover AttemptFTB 86-1 Accounting for Certain Effects of the Tax Reform Act of 1986 FTB 86-2 Accounting for an Interest in the Residual Value of a Leased AssetFTB 87-1 Accounting for a Change in Method of Accounting for Certain Postretirement Benefits FTB 87-2 Computation of a Loss on an Abandonment FTB 87-3

1e page 62

References

FTB 87-3 Accounting for Mortgage Servicing Fees and Rights FTB 88-1 Issues Relating to Accounting for LeasesFTB 88-2 Definition of a Right of Setoff FTB 90-1 Accounting for Separately Priced Extended Warranty and Product Maintenance

Contracts FTB 94-1 Application of Statement 115 to Debt Securities Restructured in a Troubled Debt

Restructuring FTB 97-1 Accounting under Statement 123 for Certain Employee Stock Purchase Plans with a

Look-Back OptionFTB 00-1 Effective Date For Certain Financial Institutions of certain provisions of Statement 140

related to the isolation of Transferred Financial Assets

1e page 63

References

GENERAL GUIDES ON:

Audit SamplingConsideration of Internal ControlPersonal Financial StatementsProspective Financial InformationReal Estate Appraisal Information

INDUSTRY GUIDES ON AUDIT OF

Agricultural Producers and CooperativesAirlinesBanks and Savings InstitutionsBrokers and Dealers in SecuritiesCasinosColleges and UniversitiesCommon Interest Realty AssociationsConstruction ContractorsCredit UnionsEmployee Benefit PlansFederal Government ContractorsFinance CompaniesHealth Care OrganizationsInvestment CompaniesNot-for-Profit OrganizationsNonprofit OrganizationsOil and Gas Producing ActivitiesProperty and Liability Insurance CompaniesState and Local Governmental UnitsStock Life Insurance CompaniesVoluntary Health and Welfare Organisation

1e page 64

References

SOP DescriptionSOP 75-2 Accounting Practices of Real Estate Investment Trusts SOP 76-3 Accounting Practices for Certain Employee Stock Ownership Plans SOP 78-9 Accounting for Investments in Real Estate Ventures SOP 81-1 Accounting for Performance of Construction-Type and Certain Production-Type

Contracts SOP 82-1 Accounting and Financial Reporting for Personal Financial Statements SOP 85-3 Accounting by Agricultural Producers and Agricultural Cooperatives SOP 88-1 Accounting for Developmental and Preoperating Costs, Purchases and

Exchanges of Take-off and Landing Slots, and Airframe Modifications SOP 90-3 Definition of the Term Substantially the Same for Holders of Debt Instruments,

as Used in Certain Audit Guides and a Statement of Position SOP 90-7 Financial Reporting by Entities in Reorganization Under the Bankruptcy Code SOP 92-1 Accounting for Real Estate Syndication Income SOP 92-3 Accounting for Foreclosed Assets SOP 92-5 Accounting for Foreign Property and Liability Reinsurance SOP 92-6 Accounting and Reporting by Health and Welfare Benefit Plans SOP 93-1 Financial Accounting and Reporting for High-Yield Debt Securities by

Investment Companies SOP 93-2 Determination, Disclosure, and Financial Statement Presentation of Income,

Capital Gain, and Return of Capital Distributions by Investment Companies SOP 93-3 Rescission of Accounting Principles Board Statements SOP 93-4 Foreign Currency Accounting and Financial Statement Presentation for

Investment Companies SOP 93-6 Employers' Accounting for Employee Stock Ownership Plans SOP 93-7 Reporting on Advertising Costs SOP 94-3 Reporting of Related Entities by Not-for-Profit Organizations SOP 94-4 Reporting of Investment Contracts Held by Health and Welfare Benefit Plans

and Defined-Contribution Pension Plans SOP 94-5 Disclosures of Certain Matters in the Financial Statements of Insurance

Enterprises SOP 94-6 Disclosure of Certain Significant Risks and Uncertainties SOP 95-1 Accounting for Certain Insurance Activities of Mutual Life Insurance

Enterprises SOP 95-2 Financial Reporting by Nonpublic Investment Partnerships SOP 95-3 Accounting for Certain Distribution Costs of Investment Companies SOP 96-1 Environmental Remediation Liabilities SOP 97-1 Accounting by Participating Mortgage Loan Borrowers SOP 97-2 Software Revenue Recognition SOP 97-3 Accounting by Insurance and Other Enterprises for Insurance-Related

Assessments SOP 98-1 Accounting for the Costs of Computer Software Developed or Obtained for

Internal Use SOP 98-2 Accounting for Costs of Activities of Not-for-Profit Organizations and State and

Local Governmental Entities That Include Fund Raising SOP 98-4 Deferral of the Effective Date of a Provision of SOP 97-2, Software Revenue

Recognition SOP 98-5 Reporting on the Costs of Start-Up Activities SOP 98-7 Deposit Accounting: Accounting for Insurance and Reinsurance Contracts That

Do Not Transfer Insurance Risk SOP 98-9 Modification of SOP 97-2, Software Revenue Recognition, With Respect to

Certain Transactions SOP 99-2 Accounting for and Reporting of Postretirement Medical Benefit (401(h))

Features of Defined Benefit Pension PlansSOP 99-3 Accounting for and Reporting of Certain Defined Contribution Plan

Investments and Other Disclosure Matters SOP 00-2 Accounting by Producers or Distributors of FilmsSOP 00-3 Accounting by Insurance Enterprises for Demutualizations and Formations of

Mutual Insurance Holding Companies and for Certain Long-Duration

1e page 65

References

Participating ContractsSOP 01-1 Amendment to Scope of Statement of Position 95-2, Financial Reporting by

Nonpublic Investment Partnerships, to Include Commodity PoolsSOP 01-2 Accounting and Reporting by Health and Welfare Benefit PlansSOP 01-5 Amendments to specific AICPA pronouncements for changes related to NAIC

codificationSOP 01-6 Accounting by certain entities that lend to or finance the activities of othersSOP 02-2 Accounting for Derivative instruments and hedging activities by not for profit

health care organizationsSOP 03-1 Accounting and Reporting by insurance enterprises for certain nontraditional

long duration contracts and for separate accounts

1e page 66

References

SOP DescriptionSOP 89-2 Reports on Audited Financial Statements of Investment Companies SOP 89-3 Questions Concerning Accountants' Services on Prospective Financial

Statements SOP 89-7 Report on the Internal Control Structure in Audits of Investment Companies SOP 90-1 Accountants' Services on Prospective Financial Statements for Internal Use

Only and Partial Presentations SOP 90-2 Report on the Internal Control Structure in Audits of Futures Commission

Merchants SOP 92-2 Questions and Answers on the Term Reasonably Objective Basis and Other

Issues Affecting Prospective Financial Statements SOP 92-4 Auditing Insurance Entities' Loss Reserves SOP 92-8 Auditing Property/Casualty Insurance Entities' Statutory Financial

StatementsApplying Certain Requirements of the NAIC Annual Statement Instructions

SOP 93-5 Reporting on Required Supplementary Information Accompanying Compiled or Reviewed Financial Statements of Common Interest Realty Associations

SOP 93-8 The Auditor's Consideration of Regulatory Risk-Based Capital for Life Insurance Enterprises

SOP 94-1 Inquiries of State Insurance Regulators SOP 95-4 Letters for State Insurance Regulators to Comply With the NAIC Model Audit

Rule SOP 95-5 Auditor's Reporting on Statutory Financial Statements of Insurance Enterprises SOP 98-3 Audits of States, Local Governments, and Not-for-Profit Organizations

Receiving Federal Awards SOP 98-6 Reporting on Management's Assessment Pursuant to the Life Insurance Ethical

Market Conduct Program of the Insurance Marketplace Standards Association SOP 98-8 Engagements to Perform Year 2000 Agreed-Upon Procedures Attestation

Engagements Pursuant to Rule 17a–5 of the Securities Exchange Act of 1934, Rule 17Ad–18 of the Securities Exchange Act of 1934, and Advisories No. 17–98 and No. 42–98 of the Commodity Futures Trading Commission

SOP 99-1 Guidance to Practitioners in Conducting and Reporting on an Agreed-Upon Procedures Engagement to Assist Management in Evaluating the Effectiveness of Its Corporate Compliance Program

SOP 00-1 Auditing Health Care Third-Party Revenues and Related Receivables SOP 01-3 Performing Agreed-Upon Procedures Engagements That Address Internal

Control Over Derivative Transactions as Required by the New York State Insurance Law

SOP 01-4 Reporting Pursuant to the Association for Investment Management and Research Performance Presentation Standards

SOP 02-1 Performing Agreed-Upon Procedures Engagements That Address Annual claims prompt payment reports as required by the New Jersey Administrative Code

1e page 67

References

EITF DescriptionEITF 84-1 1984 Tax Reform Act : Deferred Income Taxes of Stock Life Insurance CompaniesEITF 84-2 Tax Reform Act of 1984: Deferred Income Taxes Relating to Domestic International Sales

CorporationsEITF 84-3 Convertible Debt "Sweeteners" EITF 84-4 Acquisition, Development, and Construction Loans EITF 84-5 Sale of Marketable Securities with a Put Option EITF 84-6 Termination of Defined Benefit Pension Plans EITF 84-7 Termination of Interest Rate Swaps EITF 84-8 Variable Stock Purchase Warrants Given by Suppliers to Customers EITF 84-9 Deposit Float of Banks EITF 84-10 LIFO Conformity of Companies Relying on Insilco Tax Court Decision EITF 84-11 Offsetting Installment Note Receivables and Bank Debt ("Note Monetization") EITF 84-12 Operating Leases with Scheduled Rent Increases EITF 84-13 Purchase of Stock Options and Stock Appreciation Rights in a Leveraged Buyout EITF 84-14 Deferred Interest Rate Setting EITF 84-15 Grantor Trusts Consolidation EITF 84-16 Earnings-per-Share Cash-Yield Test for Zero Coupon Bonds EITF 84-17 Profit Recognition on Sales of Real Estate with Graduated Payment Mortgages or Insured

Mortgages EITF 84-18 Stock Option Pyramiding EITF 84-19 Mortgage Loan Payment Modifications EITF 84-20 GNMA Dollar Rolls EITF 84-21 Sale of a Loan with a Partial Participation Retained EITF 84-22 Prior Years' Earnings per Share Following a Savings and Loan Association Conversion and

Pooling EITF 84-23 Leveraged Buyout Holding Company Debt EITF 84-24 LIFO Accounting Issues EITF 84-25 Offsetting Nonrecourse Debt with Sales-Type or Direct Financing Lease Receivables EITF 84-26 Defeasance of Special-Purpose Borrowings EITF 84-27 Deferred Taxes on Subsidiary Stock Sales EITF 84-28 Impairment of Long-Lived Assets EITF 84-29 Gain and Loss Recognition on Exchanges of Productive Assets and the Effect of Boot EITF 84-30 Sales of Loans to Special-Purpose Entities EITF 84-31 Equity Certificates of Deposit EITF 84-33 Acquisition of a Tax Loss Carryforward--Temporary Parent-Subsidiary Relationship EITF 84-34 Permanent Discount Restricted Stock Purchase Plans EITF 84-35 Business Combinations: Sale of Duplicate Facilities and Accrual of LiabilitiesEITF 84-36 Interest Rate Swap Transactions EITF 84-37 Sale-Leaseback Transaction with Repurchase Option EITF 84-38 Identical Common Shares for a Pooling of Interests EITF 84-39 Transfers of Monetary and Nonmonetary Assets among Individuals and Entities under

Common Control EITF 84-40 Long-Term Debt Repayable by a Capital Stock Transaction EITF 84-41 Consolidation of Subsidiary after Instantaneous In-Substance Defeasance EITF 84-42 Push-Down of Parent Company Debt to a Subsidiary EITF 84-43 Income Tax Effects of Asset Revaluations in Certain Foreign Countries EITF 84-44 Partial Termination of a Defined Benefit Pension PlanEITF 85-1 Classifying Notes Received for Capital Stock EITF 85-2 Classification of Costs Incurred in a Takeover Defense EITF 85-3 Tax Benefits Relating to Asset Dispositions Following an Acquisition of a Financial Institution EITF 85-4 Downstream Mergers and Other Stock Transactions between Companies under Common

Control EITF 85-5 Restoration of Deferred Taxes Previously Eliminated by Net Operating Loss Recognition EITF 85-6 Futures Implementation Questions EITF 85-7 Federal Home Loan Mortgage Corporation Stock EITF 85-8 Amortization of Thrift Intangibles EITF 85-9 Revenue Recognition on Options to Purchase Stock of Another Entity EITF 85-10 Employee Stock Ownership Plan Contribution Funded by a Pension Plan Termination

1e page 68

References

EITF 85-11 Use of an Employee Stock Ownership Plan in a Leveraged Buyout EITF 85-12 Retention of Specialized Accounting for Investments in Consolidation EITF 85-13 Sale of Mortgage Service Rights on Mortgages Owned by Others EITF 85-14 Securities That Can Be Acquired for Cash in a Pooling of Interests EITF 85-15 Recognizing Benefits of Purchased Net Operating Loss Carryforwards EITF 85-16 Leveraged Leases EITF 85-17 Accrued Interest upon Conversion of Convertible Debt EITF 85-18 Earnings-per-Share Effect of Equity Commitment Notes EITF 85-20 Recognition of Fees for Guaranteeing a Loan EITF 85-21 Changes of Ownership Resulting in a New Basis of Accounting EITF 85-22 Retroactive Application of FASB Technical Bulletins EITF 85-23 Effect of a Redemption Agreement on Carrying Value of a Security EITF 85-24 Distribution Fees by Distributors of Mutual Funds That Do Not Have a Front-End Sales

Charge EITF 85-25 Sale of Preferred Stocks with a Put Option EITF 85-26 Measurement of Servicing Fee under FASB Statement No. 65 When a Loan Is Sold with

Servicing Retained EITF 85-27 Recognition of Receipts from Made-Up Rental Shortfalls EITF 85-28 Consolidation Issues Relating to Collateralized Mortgage Obligations EITF 85-29 Convertible Bonds with a "Premium Put" EITF 85-30 Sale of Marketable Securities at a Gain with a Put OptionEITF 85-31 Comptroller of the Currency's Rule on Deferred Tax Debits EITF 85-32 Purchased Lease Residuals EITF 85-33 Disallowance of Income Tax Deduction for Core Deposit Intangibles EITF 85-34 Banker's Acceptances and Risk Participations EITF 85-35 Transition and Implementation Issues for FASB Statement No. 86 EITF 85-36 Discontinued Operations with Expected Gain and Interim Operating Losses EITF 85-37 Recognition of Note Received for Real Estate Syndication Activities EITF 85-38 Negative Amortizing Loans EITF 85-39 Implications of SEC Staff Accounting Bulletin No. 59 on Noncurrent Marketable Equity

Securities EITF 85-40 Comprehensive Review of Sales of Marketable Securities with Put Arrangements EITF 85-41 Accounting for Savings and Loan Associations under FSLIC Management Consignment

Program EITF 85-42 Amortization of Goodwill Resulting from Recording Time Savings Deposits at Fair Values EITF 85-43 Sale of Subsidiary for Equity Interest in Buyer EITF 85-44 Differences between Loan Loss Allowances for GAAP and RAP EITF 85-45 Business Combinations: Settlement of Stock Options and AwardsEITF 85-46 Partnership's Purchase of Withdrawing Partner's EquityEITF 86-1 Recognizing Net Operating Loss Carryforwards EITF 86-2 Retroactive Wage Adjustments Affecting Medicare Payments EITF 86-3 Retroactive Regulations regarding IRC Section 338 Purchase Price Allocations EITF 86-4 Income Statement Treatment of Income Tax Benefit for Employee Stock Ownership Plan

Dividends EITF 86-5 Classifying Demand Notes with Repayment Terms EITF 86-6 Antispeculation Clauses in Real Estate Sales Contracts EITF 86-7 Recognition by Homebuilders of Profit from Sales of Land and Related Construction Contracts EITF 86-8 Sale of Bad-Debt Recovery Rights EITF 86-9 IRC Section 338 and Push-Down Accounting EITF 86-10 Pooling with 10 Percent Cash Payout Determined by Lottery EITF 86-11 Recognition of Possible 1986 Tax Law Changes EITF 86-12 Accounting by Insureds for Claims-Made Insurance Policies EITF 86-13 Recognition of Inventory Market Declines at Interim Reporting Dates EITF 86-14 Purchased Research and Development Projects in a Business Combination EITF 86-15 Increasing-Rate Debt EITF 86-16 Carryover of Predecessor Cost in Leveraged Buyout Transactions EITF 86-17 Deferred Profit on Sale-Leaseback Transaction with Lessee Guarantee of Residual Value EITF 86-18 Debtor's Accounting for a Modification of Debt Terms EITF 86-19 Change in Accounting for Other Postemployment Benefits EITF 86-20 Accounting for Other Postemployment Benefits of an Acquired Company

1e page 69

References

EITF 86-21 Application of the AICPA Notice to Practitioners regarding Acquisition, Development, and Construction Arrangements to Acquisition of an Operating Property

EITF 86-22 Display of Business Restructuring Provisions in the Income Statement EITF 86-24 Third-Party Establishment of Collateralized Mortgage Obligations EITF 86-25 Offsetting Foreign Currency Swaps EITF 86-26 Using Forward Commitments as a Surrogate for Deferred Rate Setting EITF 86-27 Measurement of Excess Contributions to a Defined Contribution Plan or Employee Stock

Ownership Plan EITF 86-28 Accounting Implications of Indexed Debt Instruments EITF 86-29 Nonmonetary Transactions: Magnitude of Boot and the Exceptions to the Use of Fair ValueEITF 86-30 Classification of Obligations When a Violation Is Waived by the Creditor EITF 86-31 Reporting the Tax Implications of a Pooling of a Bank and a Savings and Loan Association EITF 86-32 Early Extinguishment of a Subsidiary's Mandatorily Redeemable Preferred Stock EITF 86-33 Tax Indemnifications in Lease Agreements EITF 86-34 Futures Contracts Used as Hedges of Anticipated Reverse Repurchase Transactions EITF 86-35 Debentures with Detachable Stock Purchase Warrants EITF 86-36 Invasion of a Defeasance Trust EITF 86-37 Recognition of Tax Benefit of Discounting Loss Reserves of Insurance Companies EITF 86-38 Implications of Mortgage Prepayments on Amortization of Servicing Rights EITF 86-39 Gains from the Sale of Mortgage Loans with Servicing Rights Retained EITF 86-40 Investments in Open-End Mutual Funds That Invest in U.S.Government Securities EITF 86-41 Carryforward of the Corporate Alternative Minimum Tax Credit EITF 86-42 Effect of a Change in Tax Rates on Assets and Liabilities Recorded Net-of-Tax in a Purchase

Business Combination EITF 86-43 Effect of a Change in Tax Law or Rates on Leveraged Leases EITF 86-44 Effect of a Change in Tax Law on Investments in Safe Harbor Leases EITF 86-45 Imputation of Dividends on Preferred Stock Redeemable at the Issuer's Option with Initial

Below-Market Dividend Rate EITF 86-46 Uniform Capitalization Rules for Inventory under the Tax Reform Act of 1986EITF 87-1 Deferral Accounting for Cash Securities That Are Used to Hedge Rate or Price Risk EITF 87-2 Net Present Value Method of Valuing Speculative Foreign Exchange Contracts EITF 87-4 Restructuring of Operations: Implications of SEC Staff Accounting Bulletin No. 67EITF 87-5 Troubled Debt Restructurings: Interrelationship between FASB Statement No. 15 and the

AICPA Savings and Loan GuideEITF 87-6 Adjustments Relating to Stock Compensation Plans EITF 87-7 Sale of an Asset Subject to a Lease and Nonrecourse Financing: "Wrap Lease Transactions"EITF 87-8 Tax Reform Act of 1986: Issues Related to the Alternative Minimum TaxEITF 87-9 Profit Recognition on Sales of Real Estate with Insured Mortgages or Surety Bonds EITF 87-10 Revenue Recognition by Television "Barter" Syndicators EITF 87-11 Allocation of Purchase Price to Assets to Be Sold EITF 87-12 Foreign Debt-for-Equity Swaps EITF 87-13 Amortization of Prior Service Cost for a Defined Benefit Plan When There Is a History of Plan

Amendments EITF 87-15 Effect of a Standstill Agreement on Pooling-of-Interests Accounting EITF 87-16 Whether the 90 Percent Test for a Pooling of Interests Is Applied Separately to Each Company

or on a Combined Basis EITF 87-17 Spinoffs or Other Distributions of Loans Receivable to Shareholders EITF 87-18 Use of Zero Coupon Bonds in a Troubled Debt Restructuring EITF 87-19 Substituted Debtors in a Troubled Debt Restructuring EITF 87-20 Offsetting Certificates of Deposit against High-Coupon Debt EITF 87-21 Change of Accounting Basis in Master Limited Partnership Transactions EITF 87-22 Prepayments to the Secondary Reserve of the FSLIC EITF 87-23 Book Value Stock Purchase Plans EITF 87-24 Allocation of Interest to Discontinued Operations EITF 87-25 Sale of Convertible, Adjustable-Rate Mortgages with Contingent Repayment Agreement EITF 87-26 Hedging of Foreign Currency Exposure with a Tandem Currency EITF 87-27 Poolings of Companies That Do Not Have a Controlling Class of Common Stock EITF 87-28 Provision for Deferred Taxes on Increases in Cash Surrender Value of Key-Person Life

Insurance EITF 87-29 Exchange of Real Estate Involving Boot

1e page 70

References

EITF 87-30 Sale of a Short-Term Loan Made under a Long-Term Credit Commitment EITF 87-31 Sale of Put Options on Issuer's Stock EITF 87-33 Stock Compensation Issues Related to Market Decline EITF 87-34 Sale of Mortgage Servicing Rights with a Subservicing Agreement EITF 88-1 Determination of Vested Benefit Obligation for a Defined Benefit Pension Plan EITF 88-3 Rental Concessions Provided by Landlord EITF 88-4 Classification of Payment Made to IRS to Retain Fiscal Year EITF 88-5 Recognition of Insurance Death Benefits EITF 88-6 Book Value Stock Plans in an Initial Public Offering EITF 88-8 Mortgage Swaps EITF 88-9 Put Warrants EITF 88-10 Costs Associated with Lease Modification or Termination EITF 88-11 Allocation of Recorded Investment When a Loan or Part of a Loan Is Sold EITF 88-12 Transfer of Ownership Interest as Part of Down Payment under FASB Statement No. 66 EITF 88-14 Settlement of Fees with Extra Units to a General Partner in a Master Limited Partnership EITF 88-15 Classification of Subsidiary's Loan Payable in Consolidated Balance Sheet When Subsidiary's

and Parent's Fiscal Years Differ EITF 88-16 Basis in Leveraged Buyout Transactions EITF 88-17 Accounting for Fees and Costs Associated with Loan Syndications and Loan Participations EITF 88-18 Sales of Future Revenues EITF 88-19 FSLIC-Assisted Acquisitions of Thrifts EITF 88-20 Difference between Initial Investment and Principal Amount of Loans in a Purchased Credit

Card Portfolio EITF 88-21 Accounting for the Sale of Property Subject to the Seller's Preexisting Lease EITF 88-22 Securitization of Credit Card and Other Receivable Portfolios EITF 88-23 Lump-Sum Payments under Union Contracts EITF 88-24 Effect of Various Forms of Financing under FASB Statement No. 66 EITF 88-25 Ongoing Accounting and Reporting for a Newly Created Liquidating Bank EITF 88-26 Controlling Preferred Stock in a Pooling of Interests EITF 88-27 Effect of Unallocated Shares in an Employee Stock Ownership Plan on Accounting for

Business Combinations EITF 89-1 Accounting by a Pension Plan for Bank Investment Contracts and Guaranteed Investment

Contracts EITF 89-2 Maximum Maturity Guarantees on Transfers of Receivables with Recourse EITF 89-3 Balance Sheet Presentation of Savings Accounts in Financial Statements of Credit Unions EITF 89-4 Accounting for a Purchased Investment in a Collateralized Mortgage Obligation Instrument or

in a Mortgage-Backed Interest-Only Certificate EITF 89-5 Sale of Mortgage Loan Servicing Rights EITF 89-7 Exchange of Assets or Interest in a Subsidiary for a Noncontrolling Equity Interest in a New

Entity EITF 89-8 Expense Recognition for Employee Stock Ownership Plans EITF 89-9 Accounting for In-Substance Foreclosures EITF 89-10 Sponsor's Recognition of Employee Stock Ownership Plan Debt EITF 89-11 Sponsor's Balance Sheet Classification of Capital Stock with a Put Option Held by an

Employee Stock Ownership Plan EITF 89-12 Earnings-per-Share Issues Related to Convertible Preferred Stock Held by an Employee Stock

Ownership Plan EITF 89-13 Accounting for the Cost of Asbestos Removal EITF 89-14 Valuation of Repossessed Real Estate EITF 89-15 Accounting for a Modification of Debt Terms When the Debtor Is Experiencing Financial

Difficulties EITF 89-16 Consideration of Executory Costs in Sale-Leaseback Transactions EITF 89-17 Accounting for the Retail Sale of an Extended Warranty Contract in Connection with the Sale

of a Product EITF 89-18 Divestitures of Certain Investment Securities to an Unregulated Commonly Controlled Entity

under FIRREA EITF 89-19 Accounting for a Change in Goodwill Amortization for Business Combinations Initiated Prior

to the Effective Date of FASB Statement No. 72 EITF 89-20 Accounting for Cross Border Tax Benefit Leases EITF 90-2 Exchange of Interest-Only and Principal-Only Securities for a Mortgage-Backed Security

1e page 71

References

EITF 90-3 Accounting for Employers' Obligations for Future Contributions to a Multiemployer Pension Plan

EITF 90-4 Earnings-per-Share Treatment of Tax Benefits for Dividends on Stock Held by an Employee Stock Ownership Plan

EITF 90-5 Exchanges of Ownership Interests between Entities under Common Control EITF 90-6 Accounting for Certain Events Not Addressed in Issue No. 87-11 Relating to an Acquired

Operating Unit to Be SoldEITF 90-7 Accounting for a Reload Stock Option EITF 90-8 Capitalization of Costs to Treat Environmental Contamination EITF 90-9 Changes to Fixed Employee Stock Option Plans as a Result of Equity Restructuring EITF 90-10 Accounting for a Business Combination Involving a Majority-Owned Investee of a Venture

Capital Company EITF 90-11 Accounting for Exit and Entrance Fees Incurred in a Conversion from the Savings Association

Insurance Fund to the Bank Insurance Fund EITF 90-12 Allocating Basis to Individual Assets and Liabilities for Transactions within the Scope of Issue

No. 88-16 EITF 90-13 Accounting for Simultaneous Common Control Mergers EITF 90-14 Unsecured Guarantee by Parent of Subsidiary's Lease Payments in a Sale-Leaseback

Transaction EITF 90-15 Impact of Nonsubstantive Lessors, Residual Value Guarantees, and Other Provisions in

Leasing Transactions EITF 90-16 Accounting for Discontinued Operations Subsequently Retained EITF 90-17 Hedging Foreign Currency Risks with Purchased Options EITF 90-18 Effect of a "Removal of Accounts" Provision on the Accounting for a Credit Card

Securitization EITF 90-19 Convertible Bonds with Issuer Option to Settle for Cash upon Conversion EITF 90-20 Impact of an Uncollateralized Irrevocable Letter of Credit on a Real Estate Sale-Leaseback

Transaction EITF 90-21 Balance Sheet Treatment of a Sale of Mortgage Servicing Rights with a Subservicing

Agreement EITF 90-22 Accounting for Gas-Balancing Arrangements EITF 91-1 Hedging Intercompany Foreign Currency Risks EITF 91-2 Debtor's Accounting for Forfeiture of Real Estate Subject to a Nonrecourse Mortgage EITF 91-3 Accounting for Income Tax Benefits from Bad Debts of a Savings and Loan Association EITF 91-4 Hedging Foreign Currency Risks with Complex Options and Similar Transactions EITF 91-5 Nonmonetary Exchange of Cost-Method Investments EITF 91-6 Revenue Recognition of Long-Term Power Sales Contracts EITF 91-7 Accounting for Pension Benefits Paid by Employers after Insurance Companies Fail to Provide

Annuity Benefits EITF 91-8 Application of FASB Statement No. 96 to a State Tax Based on the Greater of a Franchise Tax

or an Income Tax EITF 91-9 Revenue and Expense Recognition for Freight Services in Process EITF 91-10 Accounting for Special Assessments and Tax Increment Financing Entities EITF 92-1 Allocation of Residual Value or First-Loss Guarantee to Minimum Lease Payments in Leases

Involving Land and Building(s) EITF 92-2 Measuring Loss Accruals by Transferors for Transfers of Receivables with Recourse EITF 92-3 Earnings-per-Share Treatment of Tax Benefits for Dividends on Unallocated Stock Held by an

Employee Stock Ownership Plan (Consideration of the Implications of FASB Statement No. 109 on Issue 2 of EITF Issue No. 90-4)

EITF 92-4 Accounting for a Change in Functional Currency When an Economy Ceases to Be Considered Highly Inflationary

EITF 92-5 Amortization Period for Net Deferred Credit Card Origination Costs EITF 92-7 Accounting by Rate-Regulated Utilities for the Effects of Certain Alternative Revenue

Programs EITF 92-8 Accounting for the Income Tax Effects under FASB Statement No. 109 of a Change in

Functional Currency When an Economy Ceases to Be Considered Highly Inflationary EITF 92-9 Accounting for the Present Value of Future Profits Resulting from the Acquisition of a Life

Insurance Company EITF 92-10 Loan Acquisitions involving Table Funding Arrangements EITF 92-12 Accounting for OPEB Costs by Rate-Regulated Enterprises

1e page 72

References

EITF 92-13 Accounting for Estimated Payments in Connection with the Coal Industry Retiree Health Benefit Act of 1992

EITF 93-1 Accounting for Individual Credit Card AcquisitionsEITF 93-2 Effect of Acquisition of Employer Shares for/by an Employee Benefit Trust on Accounting for

Business Combinations EITF 93-3 Plan Assets under FASB Statement No. 106 EITF 93-4 Accounting for Regulatory Assets EITF 93-5 Accounting for Environmental Liabilities EITF 93-6 Accounting for Multiple-Year Retrospectively Rated Contracts by Ceding and Assuming

Enterprises EITF 93-7 Uncertainties Related to Income Taxes in a Purchase Business Combination EITF 93-8 Accounting for the Sale and Leaseback of an Asset That Is Leased to Another Party EITF 93-9 Application of FASB Statement No. 109 in Foreign Financial Statements Restated for General

Price-Level Changes EITF 93-10 Accounting for Dual Currency Bonds EITF 93-11 Accounting for Barter Transactions Involving Barter Credits EITF 93-12 Recognition and Measurement of the Tax Benefit of Excess Tax-Deductible Goodwill

Resulting from a Retroactive Change in Tax Law EITF 93-13 Effect of a Retroactive Change in Enacted Tax Rates That Is Included in Income from

Continuing Operations EITF 93-14 Accounting for Multiple-Year Retrospectively Rated Insurance Contracts by Insurance

Enterprises and Other Enterprises EITF 93-16 Application of FASB Statement No. 109 to Basis Differences within Foreign Subsidiaries That

Meet the Indefinite Reversal Criterion of APB Opinion No. 23 EITF 93-17 Recognition of Deferred Tax Assets for a Parent Company's Excess Tax Basis in the Stock of a

Subsidiary That Is Accounted for as a Discontinued Operation EITF 93-18 Recognition of Impairment for an Investment in a Collateralized Mortgage Obligation

Instrument or in a Mortgage-Backed Interest-Only Certificate EITF 94-1 Accounting for Tax Benefits Resulting from Investments in Affordable Housing Projects EITF 94-2 Treatment of Minority Interests in Certain Real Estate Investment EITF 94-3 Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an

Activity (including Certain Costs Incurred in a Restructuring) EITF 94-4 Classification of an Investment in a Mortgage-Backed Interest-Only Certificate as Held-to-

Maturity EITF 94-5 Determination of What Constitutes All Risks and Rewards and No Significant Unresolved

Contingencies in a Sale of Mortgage Loan Servicing Rights under Issue No. 89-5 EITF 94-6 Accounting for the Buyout of Compensatory Stock Options EITF 94-7 Accounting for Financial Instruments Indexed to, and Potentially Settled in, a Company's Own

Stock EITF 94-8 Accounting for Conversion of a Loan into a Debt Security in a Debt Restructuring EITF 94-9 Determining a Normal Servicing Fee Rate for the Sale of an SBA Loan EITF 94-10 Accounting by a Company for the Income Tax Effects of Transactions among or with Its

Shareholders under FASB Statement No.109 EITF 95-1 Revenue Recognition on Sales with a Guaranteed Minimum Resale Value EITF 95-2 Determination of What Constitutes a Firm Commitment for Foreign Currency Transactions

Not Involving a Third Party EITF 95-3 Recognition of Liabilities in Connection with a Purchase Business Combination EITF 95-4 Revenue Recognition on Equipment Sold and Subsequently Repurchased Subject to an

Operating Lease EITF 95-5 Determination of What Risks and Rewards, If Any, Can Be Retained and Whether Any

Unresolved Contingencies May Exist in a Sale of Mortgage Loan Servicing Rights EITF 95-6 Accounting by a Real Estate Investment Trust for an Investment in a Service Corporation EITF 95-7 Implementation Issues Related to the Treatment of Minority Interests in Certain Real Estate

Investment Trusts EITF 95-8 Accounting for Contingent Consideration Paid to the Shareholders of an Acquired Enterprise

in a Purchase Business Combination EITF 95-9 Accounting for Tax Effects of Dividends in France in Accordance with FASB Statement No.

109 EITF 95-10 Accounting for Tax Credits Related to Dividend Payments in Accordance with FASB

Statement No. 109

1e page 73

References

EITF 95-11 Accounting for Derivative Instruments Containing both a Written Option-Based Component and a Forward-Based Component

EITF 95-12 Pooling of Interests with a Common Interest in a Joint Venture EITF 95-13 Classification of Debt Issue Costs in the Statement of Cash Flows EITF 95-14 Recognition of Liabilities in Anticipation of a Business Combination EITF 95-15 Recognition of Gain or Loss When a Binding Contract Requires a Debt Extinguishment to

Occur at a Future Date for a Specified Amount EITF 95-16 Accounting for Stock Compensation Arrangements with Employer Loan Features under APB

Opinion No. 25 EITF 95-17 Accounting for Modifications to an Operating Lease That Do Not Change the Lease

Classification EITF 95-18 Accounting and Reporting for a Discontinued Business Segment When the Measurement Date

Occurs after the Balance Sheet Date but before the Issuance of Financial Statements EITF 95-19 Determination of the Measurement Date for the Market Price of Securities Issued in a

Purchase Business Combination EITF 95-20 Measurement in the Consolidated Financial Statements of a Parent of the Tax Effects Related

to the Operations of a Foreign Subsidiary That Receives Tax Credits Related to Dividend Payments

EITF 95-21 Accounting for Assets to Be Disposed Of Acquired in a Purchase Business Combination EITF 95-22 Balance Sheet Classification of Borrowings Outstanding under Revolving Credit Agreements

That Include both a Subjective Acceleration Clause and a Lock-Box Arrangement EITF 95-23 The Treatment of Certain Site Restoration/Environmental Exit Costs When Testing a Long-

Lived Asset for Impairment EITF 96-1 Sale of Put Options on Issuer’s Stock That Require or Permit Cash Settlement EITF 96-2 Impairment Recognition When a Nonmonetary Asset Is Exchanged or Is Distributed to

Owners and Is Accounted for at the Asset’s Recorded Amount EITF 96-3 Accounting for Equity Instruments That Are Issued for Consideration Other Than Employee

Services under FASB Statement No.123 EITF 96-4 Accounting for Reorganizations Involving a Non-Pro Rata Split-off of Certain Nonmonetary

Assets to Owners EITF 96-5 Recognition of Liabilities for Contractual Termination Benefits or Changing Benefit Plan

Assumptions in Anticipation of a Business Combination EITF 96-6 Accounting for the Film and Software Costs Associated with Developing Entertainment and

Educational Software Products EITF 96-7 Accounting for Deferred Taxes on In-Process Research and Development Activities Acquired

in a Purchase Business Combination EITF 96-8 Accounting for a Business Combination When the Issuing Company Has Targeted Stock EITF 96-9 Classification of Inventory Markdowns and Other Costs Associated with a Restructuring EITF 96-10 Impact of Certain Transactions on the Held-to-Maturity Classification under FASB Statement

No. 115 EITF 96-11 Accounting for Forward Contracts and Purchased Options to Acquire Securities Covered by

FASB Statement No. 115 EITF 96-12 Recognition of Interest Income and Balance Sheet Classification of Structured Notes EITF 96-13 Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a

Company’s Own Stock EITF 96-14 Accounting for the Costs Associated with Modifying Computer Software for the Year 2000 EITF 96-15 Accounting for the Effects of Changes in Foreign Currency Exchange Rates on Foreign-

Currency-Denominated Available-for-Sale Debt Securities EITF 96-16 Investor’s Accounting for an Investee When the Investor Has a Majority of the Voting Interest

but the Minority Shareholder or Shareholders Have Certain Approval or Veto Rights EITF 96-17 Revenue Recognition under Long-Term Power Sales Contracts That Contain both Fixed and

Variable Pricing Terms EITF 96-18 Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring,

or in Conjunction with Selling, Goods or Services EITF 96-19 Debtor’s Accounting for a Modification or Exchange of Debt Instruments EITF 96-20 Impact of FASB Statement No. 125 on Consolidation of Special-Purpose Entities EITF 96-21 Implementation Issues in Accounting for Leasing Transactions involving Special-Purpose

Entities EITF 96-22 Applicability of the Disclosures Required by FASB Statement No. 114 When a Loan Is

Restructured in a Troubled Debt Restructuring into Two (or More) Loans

1e page 74

References

EITF 96-23 The Effect of Financial Instruments Indexed to, and Settled in, a Company’s Own Stock on Pooling-of-Interests Accounting for a Subsequent Business Combination

EITF 97-1 Implementation Issues in Accounting for Lease Transactions, including Those involving Special-Purpose Entities

EITF 97-2 Application of FASB Statement No. 94 and APB Opinion No. 16 to Physician Practice Management Entities and Certain Other Entities with Contractual Management Arrangements

EITF 97-3 Accounting for Fees and Costs Associated with Loan Syndications and Loan Participations after the Issuance of FASB Statement No. 125

EITF 97-4 Deregulation of the Pricing of Electricity---Issues Related to the Application of FASB Statements No. 71 and 101

EITF 97-5 Accounting for the Delayed Receipt of Option Shares upon Exercise under APB Opinion No. 25

EITF 97-6 Application of Issue No. 96-20 to Qualifying Special-Purpose Entities Receiving Transferred Financial Assets Prior to the Effective Date of FASB Statement No. 125

EITF 97-7 Accounting for Hedges of the Foreign Currency Risk Inherent in an Available-for-Sale Marketable Equity Security

EITF 97-8 Accounting for Contingent Consideration Issued in a Purchase Business Combination EITF 97-9 Effect on Pooling-of-Interests Accounting of Certain Contingently Exercisable Options or

Other Equity Instruments EITF 97-10 The Effect of Lessee Involvement in Asset Construction EITF 97-11 Accounting for Internal Costs Relating to Real Estate Property Acquisitions EITF 97-12 Accounting for Increased Share Authorizations in an IRS Section 423 Employee Stock

Purchase Plan under APB Opinion No. 25 EITF 97-13 Accounting for Costs Incurred in Connection with a Consulting Contract or an Internal Project

That Combines Business Process Reengineering and Information Technology Transformation EITF 97-14 Accounting for Deferred Compensation Arrangements Where Amounts Earned Are Held in a

Rabbi Trust and Invested EITF 97-15 Accounting for Contingency Arrangements Based on Security Prices in a Purchase Business

CombinationEITF 98-1 Valuation of Debt Assumed in a Purchase Business Combination EITF 98-2 Accounting by a Subsidiary or Joint Venture for an Investment in the Stock of Its Parent

Company or Joint Venture Partner EITF 98-3 Determining Whether a Transaction Is an Exchange of Similar Productive Assets or a Business

Combination EITF 98-4 Accounting by a Joint Venture for Businesses Received at Its Formation EITF 98-5 Accounting for Convertible Securities with Beneficial Conversion Features or Contingently

Adjustable Conversion Ratios EITF 98-6 Investor's Accounting for an Investment in a Limited Partnership When the Investor Is the

Sole General Partner and the Limited Partners Have Certain Approval or Veto RightsEITF 98-7 Accounting for Exchanges of Similar Equity Method Investments EITF 98-8 Accounting for Transfers of Investments That Are in Substance Real Estate EITF 98-9 Accounting for Contingent RentEITF 98-10 Accounting for Contracts Involved in Energy Trading and Risk Management ActivitiesEITF 98-11 Accounting for Acquired Temporary Differences in Certain Purchase Transactions That Are

Not Accounted for as Business CombinationsEITF 98-12 Application of Issue No. 96-13 to Forward Equity Sales TransactionsEITF 98-13 Accounting by an Equity Method Investor for Investee Losses When the Investor Has Loans to

and Investments in Other Securities of the InvesteeEITF 98-14 Debtor's Accounting for Changes in Line-of-Credit or Revolving-Debt Arrangements EITF 98-15 Structured Notes Acquired for a Specified Investment StrategyEITF 99-1 Accounting for Debt Convertible into the Stock of a Consolidated Subsidiary EITF 99-2 Accounting for Weather DerivativesEITF 99-3 Application of Issue No. 96-13 to Derivative Instruments with Multiple Settlement

AlternativesEITF 99-4 Accounting for Stock Received from the Demutualization of a Mutual Insurance CompanyEITF 99-5 Accounting for Pre-Production Costs Related to Long-Term Supply ArrangementsEITF 99-6 Impact of Acceleration Provision in Grants Made between Initiation and Consummation of a

Pooling-of-Interests Business Combination"EITF 99-7 Accounting for an Accelerated Share Repurchase ProgramEITF 99-8 Accounting for Transfers of Assets That Are Derivative Instruments but That Are Not

1e page 75

References

Financial AssetsEITF 99-9 Effect of Derivative Gains and Losses on the Capitalization of InterestEITF 99-10 Percentage Used to Determine the Amount of Equity Method LossesEITF 99-11 Subsequent Events Caused by Year 2000EITF 99-12 Accounting for Formula Arrangements under Issue No. 95-19EITF 99-13 Application of Issue No. 97-10 and FASB Interpretation No. 23 to Entities That Enter into

Leases with Governmental EntitiesEITF 99-14 Recognition of Losses on Firmly Committed Executory ContractsEITF 99-15 Accounting for Decreases in Deferred Tax Asset Valuation Allowances Established in a

Purchase Business Combination As a Result of a Change in Tax RegulationsEITF 99-16 Accounting for Transactions with Elements of Research and Development ArrangementsEITF 99-17 Accounting for Advertising Barter TransactionsEITF 99-18 Effect on Pooling-of-Interests Accounting of Contracts Indexed to a Company's Own StockEITF 99-19 Reporting Revenue Gross as a Principal versus Net as an AgentEITF 99-20 Recognition of Interest Income and Impairment on Certain Investments: Other Technical

MattersEITF 00-1: Investor Balance Sheet and Income Statement Display under the Equity Method for

Investments in Certain Partnerships and Other VenturesEITF 00-2: Accounting for Web Site Development CostsEITF 00-3: Application of AICPA Statement of Position 97-2 to Arrangements That Include the Right to

Use Software Stored on Another Entity's HardwareEITF 00-4: Majority Owner's Accounting for a Transaction in the Shares of a Consolidated Subsidiary and

a Derivative Indexed to the Minority Interest in That SubsidiaryEITF 00-5: Determining Whether a Nonmonetary Transaction Is an Exchange of Similar Productive AssetsEITF 00-6: Accounting for Freestanding Derivative Financial Instruments Indexed to, and Potentially

Settled in, the Stock of a Consolidated SubsidiaryEITF 00-7: Application of Issue No. 96-13 to Equity Derivative Instruments That Contain Certain

Provisions That Require Net Cash Settlement if Certain Events Outside the Control of the Issuer Occur

EITF 00-8: Accounting by a Grantee for an Equity Instrument to Be Received in Conjunction with Providing Goods or Services

EITF 00-9: Classification of a Gain or Loss from a Hedge of Debt That Is ExtinguishedEITF 00-10: Accounting for Shipping and Handling Fees and CostsEITF 00-11: Meeting the Ownership Transfer Requirements of FASB Statement No. 13 for Leases of Real

EstateEITF 00-12: Accounting by an Investor for Stock-Based Compensation Granted to Employees of an Equity

Method InvesteeEITF 00-13: Determining Whether Equipment Is "Integral Equipment" Subject to FASB Statements No. 66

and No. 98EITF 00-14: Accounting for Certain Sales IncentivesEITF 00-15: Classification in the Statement of Cash Flows of the Income Tax Benefit Received by a

Company upon Exercise of a Nonqualified Employee Stock OptionEITF 00-16: Recognition and Measurement of Employer Payroll Taxes on Employee Stock-Based

CompensationEITF 00-17: Measuring the Fair Value of Energy-Related Contracts in Applying Issue No. 98-10EITF 00-18: Accounting Recognition for Certain Transactions involving Equity Instruments Granted to

Other Than EmployeesEITF 00-19: Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a

Company's Own StockEITF 00-20: Accounting for Costs Incurred to Acquire or Originate Information for Database Content and

Other Collections of InformationEITF 00-21: Accounting for Revenue Arrangements with Multiple DeliverablesEITF 00-22: Accounting for "Points" and Certain Other Time-Based or Volume-Based Sales Incentive

Offers, and Offers for Free Products or Services to Be Delivered in the FutureEITF 00-23: Issues Related to the Accounting for Stock Compensation under APB Opinion No. 25 and

FASB Interpretation No. 44EITF 00-24: Revenue Recognition: Sales Arrangements That Include Specified-Price Trade-in RightsEITF 00-25: Vendor Income Statement Characterization of Consideration Paid to a Reseller of the Vendor's

ProductsEITF 00-26: Recognition by a Seller of Losses on Firmly Committed Executory Contracts

1e page 76

References

EITF 00-27: Application of Issue No. 98-5 to Certain Convertible InstrumentsEITF 01-1: Accounting for a Convertible Instrument Granted or Issued to a Nonemployee for Goods or

Services or a Combination of Goods or Services and CashEITF 01-2: Interpretations of APB Opinion No. 29EITF 01-3: Accounting in a Purchase Business Combination for Deferred Revenue of an AcquireeEITF 01-4: Accounting for Sales of Fractional Interests in EquipmentEITF 01-5: Application of FASB Statement No. 52 to an Investment Being Evaluated for Impairment That

Will Be Disposed OfEITF 01-10 Accounting for the Impact of the Terrorist Attacks of September 11, 2001 (September Meeting

Minutes)EITF 01-11: Application of EITF Issue No. 00-19 “Accounting for Derivative Financial Instruments

Indexed to , and Potentially Settled in, a Company’s Own Stock, “to a Contemporaneous Forward Purchase Contract and Written Put Option”

EITF 01-12: The impact of requirements of FASB Statement no. 133, “Accounting for Derivative Instruments and Hedging Activities” on Residual Value Guarantees in Connection with a Lease.

EITF 01-13: Income Display of Business Interruption Insurance RecoveriesEITF 02-2: When Separate Contracts That Meet the Definition of Financial Instruments Should Be

Combined For Accounting Purposes.EITF 02-3: Recognition and Reporting of Gains and Losses on Energy Trading Contracts under EITF

Issues no. 98-10 EITF 02-4: Debtor's Accounting for a Modification or an Exchange of Debt Instruments in Accordance

with FASB Statement No. 15, Accounting by Debtors and Creditors for Troubled Debt Restructurings

EITF 02-5: Definition of "Common Control" in Relation to FASB Statement No. 141, Business Combinations

EITF 02-6 Classification in the Statement of Cash Flows of Payments Made to Settle an Asset Retirement Obligation within the Scope of FASB Statement No. 143, Accounting for Asset Retirement Obligations

EITF 02-7: Unit of Accounting for Testing Impairment of Indefinite-Lived Intangible AssetsEITF 02-8: Accounting for Options Granted to Employees in Unrestricted, Publicly Traded Shares of an

Unrelated EntityEITF 02-10: Determining Whether a Debtor Is Legally Released as Primary Obligor When the Debtor

Becomes Secondarily Liable under the Original ObligationEITF 02-12 Permitted Activities of a Qualifying Special-Purpose Entity in Issuing Beneficial Interests

under FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities

EITF D-1 Implications and Implementation of an EITF Consensus EITF D-2 Applicability of FASB Statement No. 65 to Savings and Loan Associations EITF D-3 International Loan Swaps EITF D-4 Argentine Government Guarantee of U.S. Dollar-Denominated Loans to the Argentine Private

Sector EITF D-5 Extraordinary Treatment Related to Abandoned Nuclear Power Plants EITF D-6 Income Capital Certificates and Permanent Income Capital Certificates EITF D-7 Adjustment of Deferred Taxes to Reflect Change in Income Tax Rate EITF D-8 Accruing Bad Debt Expense at Inception of a Lease EITF D-9 Lessor Accounting under FASB Statement No. 91 EITF D-10 Required Use of Interest Method in Recognizing Interest Income EITF D-11 Impact of Stock Market Decline EITF D-12 Foreign Currency Translation--Selection of Exchange Rate When Trading Is Temporarily

Suspended EITF D-13 Transfers of Receivables in Which Risk of Foreign Currency Fluctuation Is Retained EITF D-14 Transactions involving Special-Purpose Entities EITF D-15 Earnings-per-Share Presentation for Securities Not Specifically Covered by APB Opinion No.

15 EITF D-16 Hedging Foreign Currency Risks of Future Net Income, Revenues, or Costs EITF D-17 Continued Applicability of the FASB Special Report on Implementation of Statement 96 EITF D-18 Accounting for Compensation Expense If Stock Appreciation Rights Are Cancelled EITF D-19 Impact on Pooling-of-Interests Accounting of Treasury Shares Acquired to Satisfy

Conversions in a Leveraged Preferred Stock ESOP

1e page 77

References

EITF D-20 Disclosure of Components of Deferred Tax Expense EITF D-21 Phase-in Plans When Two Plants Are Completed at Different Times but Share Common

Facilities EITF D-22 Questions Related to the Implementation of FASB Statement No. 105 EITF D-23 Subjective Acceleration Clauses and Debt Classification EITF D-24 Sale-Leaseback Transactions with Continuing Involvement EITF D-25 Application of APB Opinion No. 10, Paragraph 7, to Market Values Recognized for Off-

Balance-Sheet Financial Instruments EITF D-26 SEC Disclosure Requirements Prior to Adoption of Standard on Accounting for Postretirement

Benefits Other Than Pensions EITF D-27 Accounting for the Transfer of Excess Pension Assets to a Retiree Health Care Benefits

Account EITF D-28 SEC Disclosure Requirements Prior to Adoption of Standard on Accounting for Income Taxes EITF D-29 Implementation of FASB Statement No. 107 EITF D-30 Adjustment Due to Effect of a Change in Tax Laws or Rates EITF D-31 Temporary Differences Related to LIFO Inventory and Tax-to-Tax Differences EITF D-32 Intraperiod Tax Allocation of the Tax Effect of Pretax Income from Continuing Operations EITF D-33 Timing of Recognition of Tax Benefits for Pre-reorganization Temporary Differences and

Carryforwards EITF D-34 Accounting for Reinsurance: Questions and Answers about FASB Statement No. 113EITF D-35 FASB Staff Views on Issue No. 93-6, "Accounting for Multiple-Year Retrospectively Rated

Contracts by Ceding and Assuming Enterprises" EITF D-36 Selection of Discount Rates Used for Measuring Defined Benefit Pension Obligations and

Obligations of Postretirement Benefit Plans Other Than Pensions EITF D-37 Classification of In-Substance Foreclosed Assets EITF D-38 Reclassification of Securities in Anticipation of Adoption of FASB Statement No. 115 EITF D-39 Questions Related to the Implementation of FASB Statement No. 115 EITF D-40 Planned Sale of Securities following a Business Combination Expected to Be Accounted for as

a Pooling of Interests EITF D-41 Adjustments in Assets and Liabilities for Holding Gains and Losses as Related to the

Implementation of FASB Statement No. 115 EITF D-42 The Effect on the Calculation of Earnings per Share for the Redemption or Induced

Conversion of Preferred Stock EITF D-43 Assurance That a Right of Setoff Is Enforceable in a Bankruptcy under FASB Interpretation

No. 39 EITF D-44 Recognition of Other-Than-Temporary Impairment upon the Planned Sale of a Security

Whose Cost Exceeds Fair Value EITF D-45 Implementation of FASB Statement No. 121 for Assets to Be Disposed Off EITF D-46 Accounting for Limited Partnership Investments EITF D-47 Accounting for the Refund of Bank Insurance Fund and Savings Association Insurance Fund

Premiums EITF D-48 The Applicability of FASB Statement No. 65 to Mortgage-Backed Securities That Are Held-

to-Maturity EITF D-49 Classifying Net Appreciation on Investments of a Donor-Restricted Endowment Fund EITF D-50 Classification of Gains and Losses from the Termination of an Interest Rate Swap Designated

to Commercial Paper EITF D-51 The Applicability of FASB Statement No. 115 to Desecuritizations of Financial Assets EITF D-52 Impact of FASB Statement No. 125 on EITF Issues EITF D-53 Computation of Earnings per Share for a Period That Includes a Redemption or an Induced

Conversion of a Portion of a Class of Preferred Stock EITF D-54 Accounting by the Purchaser for a Seller’s Guarantee of the Adequacy of Liabilities for Losses

and Loss Adjustment Expenses of an Insurance Enterprise Acquired in a Purchase Business Combination

EITF D-55 Determining a Highly Inflationary Economy under FASB Statement No. 52 EITF D-56 Accounting for a Change in Functional Currency and Deferred Taxes When an Economy

Becomes Highly Inflationary EITF D-57 Accounting Issues Relating to the Deposit Insurance Funds Act of 1996 EITF D-58 Effect on Pooling-of-Interests Accounting of Certain Contingently Exercisable Options to Buy

Equity Securities EITF D-59 Payment of a Termination Fee in Connection with a Subsequent Business Combination That Is

1e page 78

References

Accounted for Using the Pooling-of-Interests Method EITF D-60 Accounting for the Issuance of Convertible Preferred Stock and Debt Securities with a

Nondetachable Conversion Feature EITF D-61 Classification by the Issuer of Redeemable Instruments That Are Subject to Remarketing

Agreements EITF D-62 Computing Year-to-Date Diluted Earnings per Share under FASB Statement No. 128 EITF D-63 Call Options “Embedded” in Beneficial Interests Issued by a Qualifying Special-Purpose

Entity EITF D-64 Accounting for Derivatives Used to Hedge Interest Rate Risk EITF D-65 Maintaining Collateral in Repurchase Agreements and Similar Transactions under FASB

Statement No. 125 EITF D-66 Effect of a Special-Purpose Entity's Powers to Sell, Exchange, Repledge, or Distribute

Transferred Financial Assets under FASB Statement No. 125 EITF D-67 Isolation of Assets Transferred by Financial Institutions under FASB Statement No. 125 EITF D-68 Accounting by an Equity Method Investor for Investee Losses When the Investor Has Loans to

and Investments in Other Securities of an Investee EITF D-69 Gain Recognition on Transfers of Financial Assets under FASB Statement No. 125 EITF D-70 Questions Related to the Implementation of FASB Statement No. 131 EITF D-71 Accounting Issues Relating to the Introduction of the European Economic and Monetary

Union (EMU) EITF D-72 Effect of Contracts That May Be Settled in Stock or Cash on the Computation of Diluted

Earnings per ShareEITF D-73 Reclassification and Subsequent Sales of Securities in Connection with the Adoption of FASB

Statement No. 133EITF D-74 Issues Concerning the Scope of the AICPA Guide on Investment CompaniesEITF D-75 When to Recognize Gains and Losses on Assets Transferred to a Qualifying Special-Purpose

EntityEITF D-76 Accounting by Advisors for Offering Costs Paid on Behalf of Funds When the Advisor Does

Not Receive both 12b-1 Fees and Contingent Deferred Sales ChargesEITF D-77 Accounting for Legal Costs Expected to Be Incurred in Connection with a Loss ContingencyEITF D-78 Accounting for Supervisory Goodwill Litigation Awards or SettlementsEITF D-79 Accounting for Retroactive Insurance Contracts Purchased by Entities Other Than Insurance

EnterprisesEITF D-80 Application of FASB Statements No. 5 and No. 114 to a Loan Portfolio EITF D-81 Accounting for the Acquisition of Consolidated BusinessesEITF D-82 Effect of Preferred Stock Dividends Payable in Common Shares on Computation of Income

Available to Common StockholdersEITF D-83 Accounting for Payroll Taxes Associated with Stock Option ExercisesEITF D-83 Accounting for Payroll Taxes Associated with Stock Option ExercisesEITF D-84 Accounting for Subsequent Investments in an Investee After Suspension of Equity Method

Loss Recognition When an Investor Increases Its Ownership Interest from Significant Influence to Control Through a Market Purchase of Voting Securities

EITF D-85 Application of Certain Transition Provisions in SEC Staff Accounting Bulletin No. 101EITF D-86 Issuance of Financial StatementsEITF D-87 Determination of the Measurement Date for Consideration Given by the Acquirer in a

Business Combination when That Consideration Is Securities Other Than Those Issued by the Acquirer

EITF D-88 Planned Major Maintenance ActivitiesEITF D-89 Accounting for Costs of Future Medicare Compliance AuditsEITF D-90 Grantor Balance Sheet Presentation of Unvested, Forfeitable Equity Instruments Granted to a

NonemployeeEITF D-91 Application of APB Opinion No. 25 and FASB Interpretation No. 44 to an Indirect Repricing

of a Stock OptionEITF D-92 The Effect of FASB Statement No. 135 on the Measurement and Recognition of Net Periodic

Benefit Cost under FASB Statements No. 87 and No. 106EITF D-93 Accounting for the Rescission of the Exercise of Employee Stock OptionsEITF D-94 Questions and Answers Related to the Implementation of FASB Statement No. 140EITF D-95 Effect of Participating Convertible Securities on the Computation of Basic Earnings per ShareEITF D-96 Accounting for Management Fees Based on a FormulaEITF D-97 Push-Down Accounting

1e page 79

References

EITF D-98 Classification and Measurement of Redeemable SecuritiesEITF D-99 Questions and Answers Related to Servicing Activities in a Qualifying Special-Purpose Entity

under FASB Statement No. 140EITF D-99 Questions and Answers Related to Servicing Activities in a Qualifying Special-Purpose Entity

under FASB Statement No. 140EITF D-100 Clarification of Paragraph 61(b) of FASB Statement No. 141 and EITF D-101 Clarification of Reporting Unit Guidance in Paragraph 30 of FASB Statement No. 142EITF D-102 Documentation of the Methods Used to Measure Hedge Ineffectiveness under FASB Statement

No. 133EITF D-103 Income Statement Characterization of Reimbursements Received for "Out-of-Pocket"

Expenses IncurredEITF D-104 Clarification of Transition Guidance in Paragraph 51 of FASB Statement No. 144EITF D-105 Accounting in Consolidation for Energy Trading Contracts between Affiliated Entities When

the Activities of One but Not Both Affiliates Are within the Scope of EITF Issue No. 98-10, "Accounting for Contracts Involved in Energy Trading and Risk Management Activities"

1e page 80

usgaap overview

Documents