CVS 2002 Annual Report Download - page 31

In June 2001, SFAS No. 143, "Accounting for Asset Retirement
Obligations" was issued. This statement applies to legal
obligations associated with the retirement of certain tangible
long-lived assets. As required, the Company will adopt this
statement effective in 2003. The Company does not expect
that the adoption of this statement will have a material impact
on its consolidated results of operations or financial position.
The Company adopted SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets" effective
December 30, 2001. This statement addresses financial
accounting and reporting for the impairment or disposal of
long-lived assets. The adoption of this statement did not have a
material impact on the Company’s consolidated results of
operations or financial position.
In April 2002, SFAS No. 145, "Rescission of FASB Statements
No. 4, 44 and 64, Amendment of FASB Statement No. 13, and
Technical Corrections" was issued. This statement (i) eliminates
extraordinary accounting treatment for a gain or loss reported
on the extinguishment of debt, (ii) eliminates inconsistencies in
the accounting required for sale-leaseback transactions and
certain lease modifications with similar economic effects, and
(iii) amends other existing authoritative pronouncements to
make technical corrections, clarify meanings, or describe their
applicability under changed conditions. As required, the
Company will adopt SFAS No. 145 effective in 2003. The
Company does not expect that the adoption of this statement
will have a material impact on its consolidated results of
operations or financial position.
In June 2002, SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities" was issued. This statement
nullifies existing guidance related to the accounting and
reporting for costs associated with exit or disposal activities
and requires that the fair value of a liability associated with an
exit or disposal activity be recognized when the liability is
incurred. Under previous guidance, certain exit costs were
permitted to be accrued upon management's commitment to an
exit plan, which is generally before an actual liability has been
incurred. The provisions of this statement are required to be
adopted for all exit or disposal activities initiated after
December 31, 2002. This statement will not impact any
liabilities recorded prior to adoption. As required, the Company
will adopt SFAS No. 146 effective in 2003. The Company does
not expect that the adoption of this statement will have a
material impact on its consolidated results of operations or
financial position.
In September 2002, the EITF Issue No. 02-16, “Accounting by
a Reseller for Cash Consideration Received from a Vendor” was
issued. The pronouncement addresses two issues. The first issue
requires that vendor allowances be categorized as a reduction
of cost of sales unless they are a reimbursement of costs
incurred to sell the vendor’s products, in which case, the cash
consideration should be characterized as a reduction of that
cost. Cash consideration received from a vendor in excess of the
fair value of the benefit received should be characterized as a
reduction of cost of sales. As required, the Company will adopt
this portion of the pronouncement in 2003. The second issue
requires that rebates or refunds payable only if the customer
completes a specified cumulative level of purchases should be
recognized as a reduction of cost of sales based on a systematic
and rational allocation over the purchase period. This portion of
the pronouncement is to be applied to all new arrangements
initiated after November 21, 2002. The Company does not
expect that the adoption of this pronouncement will have a
material impact on its consolidated results of operations or
financial position.
In November 2002, FASB Interpretation No. 45, “Guarantor’s
Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others” was
issued. This interpretation requires certain guarantees to be
recorded at fair value as opposed to the current practice of
recording a liability only when a loss is probable and reasonably
estimable. It also requires a guarantor to make enhanced
disclosures concerning guarantees, even when the likelihood of
making any payments under the guarantee is remote. The initial
recognition and initial measurement provisions are applicable on
a prospective basis to guarantees issued or modified after
December 31, 2002, while the enhanced disclosure
requirements are effective after December 15, 2002. The
Company does not expect the adoption of this interpretation
will have a material impact on its consolidated financial position
or results in operation.
In December 2002, SFAS No. 148, “Accounting for Stock-Based
Compensation–Transition and Disclosure” was issued. This
statement provides alternative methods of transition for a
voluntary change to the fair value based method of accounting
for stock-based employee compensation. This statement also
amends the disclosure requirements of SFAS No. 123 to require
prominent disclosures about the method of accounting for
stock-based compensation and the effect of the method used
on reported results. As required, the Company adopted this
statement effective in 2002. The adoption did not have a
material impact on the Company’s consolidated results of
operations or financial position.
In January 2003, FASB Interpretation No. 46, “Consolidation of
Variable Interest Entities” was issued. This interpretation requires
a company to consolidate variable interest entities (“VIE”) if the
enterprise is a primary beneficiary (holds a majority of the
variable interest) of the VIE and the VIE possesses specific
characteristics. It also requires additional disclosures for parties
involved with VIEs. The provisions of this interpretation are
effective in 2003. Accordingly, the Company will adopt FASB
Interpretation No. 46 effective fiscal 2003 and is evaluating the
effect such adoption may have on its consolidated results of
operations and financial position.
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2002 Annual Report