AutoNation 2000 Annual Report Download - page 45

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issued. SFAS 140 revises the standards for accounting for securitizations and
other transfers of financial assets and collateral and requires certain
disclosures. SFAS 140 disclosure requirements are effective for fiscal years
ending after December 15, 2000, and have been included in Note 13, Asset
Securitizations. Accounting for transfers and servicing of financial assets and
extinguishment of liabilities under SFAS 140 is effective for transactions
occurring after March 31, 2001. Although additional interpretive guidance is
expected from the Financial Accounting Standards Board ("FASB"), the Company
does not expect the adoption of the accounting requirements of SFAS 140, as
currently interpreted, will have a material impact on its consolidated
financial position, results of operations or cash flows.
As described in Note 10, Restructuring and Impairment Charges
(Recoveries), Net, during 2000, an impairment charge totaling $16.6 million
related to the deterioration of vehicle residual values associated with finance
lease receivables was recognized. Finance lease originations were discontinued
in mid-1999 and the majority of the remaining leases terminate in late 2001.
In 2000, the Emerging Issues Task Force of the Financial Accounting
Standards Board reached a consensus on EITF Issue No. 99-20, "Recognition of
Interest Income and Impairment on Purchased and Retained Beneficial Interests
in Securitized Financial Assets" ("EITF 99-20"). EITF 99-20 specifies, among
other things, how a transferor that retains an interest in a securitization
transaction should account for interest income and impairment. EITF 99-20 is
effective for fiscal quarters beginning after March 15, 2001. The Company plans
to adopt EITF 99-20 on April 1, 2001. The Company does not expect adoption of
EITF 99-20 to have a material impact on its consolidated financial position,
results of operations or cash flows.
Inventory
Inventory consists primarily of retail vehicles held for sale valued using
the specific identification method, net of reserves. Cost includes acquisition,
reconditioning and transportation expenses. Parts and accessories are valued at
the factory list price which approximates lower of cost (first-in, first-out)
or market.
Inventory acquired in business acquisitions is recorded at fair value.
Adjustments to convert from the acquired entity's accounting method (generally
last-in, first-out) to the Company's accounting method are recorded as an
adjustment to the cost in excess of the fair value of net assets acquired.
A summary of inventory at December 31 is as follows:
2000 1999
------------- -------------
New vehicles ......................... $ 2,295.8 $ 2,085.0
Used vehicles ........................ 317.9 470.1
Parts, accessories and other ......... 155.5 151.7
---------- ----------
$ 2,769.2 $ 2,706.8
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