AutoNation 2006 Annual Report Download - page 53

Download and view the complete annual report

Please find page 53 of the 2006 AutoNation annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 139

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139

Table of Contents


In October 2005, the FASB issued FASB Staff Position (“FSP”) No. FAS 13-1, “Accounting for Rental Costs Incurred during a
Construction Period.” FSP No. FAS 13-1 requires rental costs associated with operating leases that are incurred during a construction
period to be recognized as rental expense. FSP No. FAS 13-1 is effective for reporting periods beginning after December 15, 2005 and did
not have a material impact on the Company’s Consolidated Financial Statements.
In March 2006, the EITF reached a consensus on EITF Issue No. 06-3, “How Taxes Collected from Customers and Remitted to
Governmental Authorities Should Be Presented in the Income Statement (that is, Gross versus Net Presentation)” (EITF 06-3), which
allows companies to adopt a policy of presenting taxes in the income statement on either a gross or net basis. Taxes within the scope of this
EITF include taxes that are imposed on a revenue transaction between a seller and a customer, for example, sales taxes, use taxes, value-
added taxes, and some types of excise taxes. EITF 06-3 is effective for interim and annual reporting periods beginning after December 15,
2006. EITF 06-3 will not impact the method for recording and reporting these sales taxes in the Company’s Consolidated Financial
Statements as the Company’s policy is to exclude all such taxes from revenue.
In July 2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — an Interpretation of FASB
Statement No. 109, Accounting for Income Taxes” (FIN 48) to create a single model to address accounting for uncertainty in tax positions.
FIN 48 clarifies the accounting for income taxes by prescribing a minimum recognition threshold a tax position is required to meet before
being recognized. FIN 48 also provides guidance on derecognition, measurement, classification, interest and penalties, accounting in
interim periods, disclosure and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. The Company is
currently evaluating the impact of adopting FIN 48 and does not expect the adoption of FIN 48 will have a material impact on its
Consolidated Financial Statements.
In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” SFAS No. 157 defines fair value and applies to
other accounting pronouncements that require or permit fair value measurements and expands disclosures about fair value measurements.
SFAS No. 157 is effective for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. The
Company is currently evaluating the impact of adopting SFAS No. 157 on its Consolidated Financial Statements.
In September 2006, the SEC issued Staff Accounting Bulletin (“SAB”) No. 108, to address diversity in practice in quantifying
financial statement misstatements and the potential for the build up of improper amounts on the balance sheet. SAB No. 108 identifies the
approach that registrants should take when evaluating the effects of unadjusted misstatements on each financial statement, the
circumstances under which corrections of misstatements should result in a revision to financial statements, and disclosures related to the
correction of misstatements. SAB No. 108 is effective for the Company for the fiscal year ending December 31, 2006. The adoption of
SAB No. 108 did not have a material impact on the Company’s Consolidated Financial Statements.
52