FairPoint Communications 2003 Annual Report Download - page 26

realizable, however, could be reduced in the near term if estimates of future taxable income during the carry forward period are reduced.
 We review our long-lived assets, including goodwill for impairment whenever
events or changes in circumstances indicate that the carrying value may not be recoverable. Several factors could trigger an impairment
review such as (1) significant underperformance relative to expected historical or projected future operating results, (2) significant regulatory
changes that would impact future operating revenues, (3) significant negative industry or economic trends and (4) significant changes in the
overall strategy in which we operate our overall business. Net goodwill was $468.8 million at December 31, 2003.
We are required to perform an annual impairment review of goodwill as required by Statement of Financial Accounting Standards
(SFAS) No. 142, . No impairment of goodwill or other long-lived assets resulted from the annual
valuation of goodwill.

The Financial Accounting Standards Board (FASB) issued SFAS No. 143, , which was
effective January 1, 2003. This statement requires, among other things, the accounting and reporting of legal obligations associated with the
retirement of long-lived assets that result from the acquisition, construction, development or normal operation of a long-lived asset. The FCC
has ordered that companies subject to regulatory accounting rules not adopt SFAS No. 143 and accordingly, the Company will not adopt this
standard for its regulated operations. The adoption of this pronouncement, effective January 1, 2003, did not have a material effect on the
financial statements of our non-regulated entities.
In July 2002, the FASB issued SFAS No. 146,  (SFAS No. 146).
SFAS No. 146 will apply to exit ("restructuring") plans initiated after December 31, 2002. Under SFAS No. 146, restructuring costs
associated with a plan to exit an activity are required to be recognized when incurred. The Company's previously recorded restructuring
liabilities were recognized when the Company committed to an exit plan, consistent with the guidance in EITF 94-3, 
 . In
the event the Company initiates new exit plans after December 31, 2002, the liability recognition of SFAS No. 146 will apply.
In November 2002, the FASB issued Interpretation No. 45, 
 , an interpretation of SFAS No. 5, 57 and 107 and rescission of FASB
Interpretation No. 34. This interpretation requires additional disclosures to be made by a guarantor in its interim and annual financial
statements about its
37
obligations under certain guarantees that it has issued. It also specifies the requirements for liability recognition (at fair value) for obligations
undertaken in issuing the guarantee. The disclosure requirements were effective in 2002. The initial recognition and measurement
provisions are effective for all guarantees within the scope of Interpretation 45 issued or modified after December 31, 2002. The adoption of
this pronouncement did not have a material effect on our financial statements.
In December 2002, the FASB issued SFAS No. 148, 
. This Statement amends SFAS No. 123,  , to provide
alternative methods of transition for a voluntary change to the fair value method of accounting for stock based employee compensation. In
addition, this Statement amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim
financial statements. Although we have adopted the disclosure provisions required by SFAS No. 148, we do not expect to voluntarily adopt
the fair value based method of accounting for our stock based compensation plans. The adoption of SFAS No. 148 did not impact our financial
position or results of operations.
In January 2003, the FASB issued FASB Interpretation No. 46, 
. In December 2003, the FASB revised Interpretation No. 46, which clarifies the application of Accounting Research Bulletin (ARB)
No. 51,  As per ARB No. 51, a general rule for preparation of consolidated financial statements of a
parent and its subsidiary is ownership by the parent, either directly or indirectly, of over fifty percent of the outstanding voting shares of a
subsidiary. However, application of the majority voting interest requirement of ARB No. 51 to certain types of entities may not identify the
party with a controlling financial interest because the controlling financial interest may be achieved through arrangements that do not involve
voting interest. Interpretation No. 46 clarifies applicability of ARB No. 51 to entities in which the equity investors do not have the
characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional
subordinated financial support. Interpretation No. 46 requires an entity to consolidate a variable interest entity even though the entity does
not, either directly or indirectly, own over fifty percent of the outstanding voting shares. Interpretation No. 46 is applicable for financial
statements issued for reporting periods that end after March 15, 2004. We are in the process of reviewing the recent provisions of
Interpretation No. 46. Any potential changes, as a result of implementation of Interpretation No. 46, are not expected to have a significant
impact on our financial statements.
In May 2003, the FASB issued SFAS No. 150, 
 SFAS No. 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics
of both liabilities and equity. SFAS No. 150 applies specifically to a number of financial instruments that companies have historically
presented within their financial statements either as equity or between the liabilities section and the equity section, rather than as liabilities.
SFAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of