2K Sports 2008 Annual Report Download - page 84

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Recently Issued Accounting Pronouncements
In September 2006, the Financial Accounting Standards Board (‘‘FASB’’) issued Statement of Financial
Accounting Standard (‘‘SFAS’’) No. 157, Fair Value Measurements (‘‘SFAS 157’’), which clarifies the
definition of fair value, establishes a framework for measuring fair value in generally accepted accounting
principles, and expands disclosures about fair value measurement. SFAS 157 does not require any new fair
value measurements and eliminates inconsistencies in guidance found in various prior accounting
pronouncements. SFAS 157 is effective for fiscal years beginning after November 15, 2007 (November 1,
2008 for the Company), and interim periods within those fiscal years. However, on February 12, 2008, the
FASB issued FASB Staff Position (‘‘FSP’’) FAS 157-2 which delays the effective date of SFAS 157 for all
nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in
the financial statements on a recurring basis (at least annually). This FSP partially defers the effective date
of SFAS 157 to fiscal years beginning after November 15, 2008 (November 1, 2009 for the Company), and
interim periods within those fiscal years for items within the scope of this FSP. On October 10, 2008 the
FASB issued FASB issued FSP FAS 157-3, Determining the Fair Value of a Financial Asset When the Market
for That Asset Is Not Active, which clarifies the application of SFAS 157, in a market that is not active. We
do not expect that the adoption of SFAS 157, FSP FAS 157-2 and FSP FAS 157-3 will have a material effect
on our consolidated financial position, cash flows or results of operations.
In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial
Liabilities (‘‘SFAS 159’’). SFAS 159 expands the use of fair value accounting but does not affect existing
standards, which require assets or liabilities to be carried at fair value. Under SFAS 159, a company may
elect to use fair value to measure certain financial assets and financial liabilities, on an
instrument-by-instrument basis. If the fair value option is elected, unrealized gains and losses on existing
items for which fair value has been elected are reported as a cumulative adjustment to beginning retained
earnings. Subsequent to the adoption of SFAS 159, changes in fair value are recognized in earnings.
SFAS 159 is effective for fiscal years beginning after November 15, 2007 (November 1, 2008 for the
Company), with earlier adoption permitted. We did not adopt SFAS 159 prior to November 1, 2008 and do
not expect it to have a material effect on our consolidated financial position, cash flows or results of
operations.
In June 2007, the FASB ratified the Emerging Issues Task Force’s (‘‘EITF’’) consensus conclusion on
EITF 07-03, Accounting for Nonrefundable Advance Payments for Goods or Services to Be Used in Future
Research and Development. EITF 07-03 addresses the diversity which exists with respect to the accounting
for the non-refundable portion of a payment made by a research and development entity for future
research and development activities. Under this conclusion, an entity is required to defer and capitalize
non-refundable advance payments made for research and development activities until the related goods
are delivered or the related services are performed. EITF 07-03 is effective for interim or annual reporting
periods in fiscal years beginning after December 15, 2007 (November 1, 2008 for the Company), and
requires prospective application for new contracts entered into after the effective date. We do not expect
that the adoption of EITF 07-03 will have a material effect on our consolidated financial position, cash
flows or results of operations.
In December 2007, the FASB issued SFAS No. 141(R), Business Combinations (‘‘SFAS 141(R)’’). This
Statement provides greater consistency in the accounting and financial reporting of business combinations.
It requires the acquiring entity in a business combination to recognize all assets acquired and liabilities
assumed in the transaction, establishes the acquisition-date fair value as the measurement objective for all
assets acquired and liabilities assumed, and requires the acquirer to disclose the nature and financial effect
of the business combination. SFAS 141(R) is effective for all fiscal years beginning after December 15,
2008 (November 1, 2009 for the Company) and interim periods within those years, with earlier adoption
prohibited. We are evaluating the impact that the adoption of SFAS 141(R) will have on our consolidated
financial position, cash flows or results of operations.
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