Cincinnati Bell 2006 Annual Report Download - page 159

transaction between a seller and a customer should be shown in the income statement on either a gross or net
basis, based on the entity’s accounting policy. This policy should be disclosed pursuant to Accounting Principles
Board Opinion No. 22, “Disclosure of Accounting Policies.” In addition, any such taxes that are reported on a
gross basis, if material, should be disclosed. EITF 06-3 will be effective for interim and annual reporting periods
beginning after December 15, 2006. Implementation of this Statement is not expected to have a material impact
on the Company’s financial statements.
In July 2006, the FASB issued FIN 48, which clarifies the accounting for income taxes by prescribing the
minimum recognition threshold as “more-likely-than-not” that a tax position must meet before being recognized
in the financial statements. FIN 48 also provides guidance on derecognition, classification, interest and penalties,
accounting for income taxes in interim periods, financial statement disclosure and transition rules. Under this
Interpretation, a Company determines whether it is more likely than not that a tax position will be sustained upon
examination by respective taxing authorities, including resolution of any litigation. A tax position that meets the
more likely than not recognition threshold is measured to determine the amount of benefit to recognize in the
financial statements. The tax position is measured at the largest amount of benefit that is more likely than not
realized. The Company will be required to adopt the provisions of FIN 48 related to all of the Company’s tax
positions in the fiscal year beginning January 1, 2007. The cumulative effect of applying the provisions of the
Interpretation will be reported as an adjustment to the opening balance of retained earnings. The Company has
not yet completed its evaluation of FIN 48.
In September 2006, FASB ratified Emerging Issues Task Force Issue No. 06-1, “Accounting for
Consideration Given by a Service Provider to Manufacturers or Resellers of Equipment Necessary for an
End-Customer to Receive Service from the Service Provider” (“EITF 06-1”). This guidance requires the
application of EITF 01-9, “Accounting for Consideration Given by a Vendor to a Customer”(“EITF 01-9”), when
consideration is given to a reseller or manufacturer for benefit to the service provider’s end customer. EITF 01-9
requires the consideration given be recorded as a liability at the time of the sale of the equipment and, also,
provides guidance for the classification of the expense. EITF 06-1 is effective for the first fiscal year that begins
after June 15, 2007. Implementation of this Statement is not expected to have a material impact on the
Company’s financial statements.
In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, “Fair Value
Measurements” (“SFAS 157”). The objective of the Statement is to define fair value, establish a framework for
measuring fair value and expand disclosures about fair value measurements. SFAS 157 will be effective for
interim and annual reporting periods beginning after November 15, 2007. The Company has not yet assessed the
impact of this Statement on the Company’s financial statements.
In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, “The Fair Value
Option for Financial Assets and Financial Liabilities” (“SFAS 159”). The Statement permits entities to choose to
measure many financial instruments and certain other items at fair value that are not currently required to be
measured at fair value. The objective is to improve financial reporting by providing entities with the opportunity
to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without
having to apply complex hedge accounting provisions. SFAS 159 will be effective for the first fiscal year that
begins after November 15, 2007. The Company has not yet assessed the impact of this Statement on the
Company’s financial statements.
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