IBM 1997 Annual Report Download - page 58

Effective January 1, 1995, the company implemented SFAS
114, “Accounting by Creditors for Impairment of a Loan,”
and SFAS 118, “Accounting by Creditors for Impairment
of a Loan—Income Recognition and Disclosures.” These
standards prescribe impairment measurements and
reporting related to certain loans.
The company implemented SFAS 116, “Accounting for
Contributions Received and Contributions Made,”
effective January 1, 1995. This standard requires that the
fair value of contributions, including unconditional
promises to give, be recognized as expense in the
period made.
In 1995, the company implemented SFAS 121, “Accounting
for the Impairment of Long-Lived Assets and for Long-
Lived Assets to Be Disposed Of.” This standard prescribes
the method for asset impairment evaluation for long-
lived assets and certain identifiable intangibles that are
either to be held and used or intended for disposal. The
company was generally in conformance with this standard
prior to adoption.
In 1995, the company adopted the American Institute of
Certified Public Accountants SOP 93-7, “Reporting on
Advertising Costs.” This SOP provides guidance on
financial reporting of advertising costs in annual financial
statements. See note O, “Selling and Advertising,” on
page 64 for additional disclosure on advertising expenses.
The company was generally in conformance with this
SOP prior to adoption.
In 1998, the company will implement two accounting
standards issued by the Financial Accounting Standards
Board in June of 1997. SFAS 130, “Reporting Comprehensive
Income,” and SFAS 131, “Disclosures About Segments of
an Enterprise and Related Information,” will have no effect
on the company’s financial position or results of operations
as they require only changes in or additions to current
disclosures.
During 1997, the Accounting Standards Executive
Committee of the American Institute of Certified Public
Accountants issued SOP 97-2, “Software Revenue
Recognition.” This SOP provides guidance on revenue
recognition on software transactions and is effective for
transactions entered into in fiscal years beginning after
December 15, 1997. The company is taking steps to meet
the requirements of the SOP and expects that it will not
have a material impact on the financial position or results
of operations of the company.
C Common Stock Split
On April 29, 1997, the stockholders of the company
approved amendments to the Certificate of Incorporation
to increase the number of authorized shares of common
stock from 750 million to 1,875 million, which was required
to effect a two-for-one stock split approved by the
company’s Board of Directors on January 28, 1997. In
addition, the amendments served to reduce the par value
of the common stock from $1.25 to $.50 per share.
Stockholders of record at the close of business on
May 9, 1997, received one additional share for each share
held. All share and per share data prior to the second
quarter of 1997 presented in the Consolidated Financial
Statements and footnotes of this annual report reflect
the two-for-one stock split.
D Inventories
(Dollars in millions)
At December 31: 1997 1996
Finished goods $1,090 $1,413
Work in process 4,026 4,377
Raw materials 23 80
_________________ __________________
Total $5,139 $5,870
notes to consolidated financial statements
International Business Machines Corporation
and Subsidiary Companies
56