Jack In The Box 2005 Annual Report Download - page 71

JACK IN THE BOX INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)
(continued)
18. NEW ACCOUNTING PRONOUNCEMENTS
Accounting pronouncements adopted in fiscal 2005 – In December 2004, the FASB issued SFAS 153, Exchanges of Non-
Monetary Assets. SFAS 153 eliminates the exception for non-monetary exchanges of similar productive assets and replaces
it with a general exception for exchanges of non-monetary assets that do not have commercial substance. SFAS 153 was
effective for non-monetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. The adoption of this
Statement did not have a material impact on our operating results or financial condition.
On June 29, 2005, the FASB ratified Emerging Issues Task Force (“EITF”) 05-06, Determining the Amortization Period for
Leasehold Improvements Purchased after Lease Inception or Acquired in a Business Combination. This Issue addresses the
amortization period for leasehold improvements in operating leases that are either (a) placed in service significantly after
and not contemplated at or near the beginning of the initial lease term or (b) acquired in a business combination. Leasehold
improvements that are placed in service significantly after and not contemplated at or near the beginning of the lease term
should be amortized over the shorter of the useful life of the assets or a term that includes required lease periods and
renewals that are deemed to be reasonably assured at the date the leasehold improvements are purchased. Leasehold
improvements acquired in a business combination should be amortized over the shorter of the useful life of the assets or a
term that includes required lease periods and renewals that are deemed to be reasonably assured at the date of acquisition.
This EITF is effective for leasehold improvements that are purchased or acquired after June 29, 2005. The adoption of this
EITF did not have a material impact on our operating results or financial condition.
Future application of accounting principles – In November 2004, the FASB issued SFAS 151, Inventory Costs. SFAS 151
clarifies the accounting for abnormal amounts of idle facilities expense, freight, handling costs and wasted material. SFAS
151 is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. We expect the adoption of
this Statement will not have a material impact on our operating results or financial condition.
In December 2004, the FASB issued SFAS 123R, Share-Based Payment. SFAS 123R revises SFAS 123, Accounting for
Stock-Based Compensation, and generally requires, among other things, that all employee stock-based compensation be
measured using a fair value method and that the resulting compensation cost be recognized in the financial statements.
SFAS 123R also provides guidance on how to determine the grant-date fair-value for awards of equity instruments, as well
as alternative methods of adopting its requirements. On April 14, 2005, the Securities and Exchange Commission delayed
the effective date of required adoption of SFAS 123R to the first fiscal year beginning after June 15, 2005. We plan to adopt
the provisions of SFAS 123R in the first quarter of fiscal year 2006 and expect the impact in fiscal 2006 to be approximately
$0.15 per diluted share.
In March 2005, the FASB issued Interpretation No. 47, Accounting for Conditional Asset Retirement Obligations—an
interpretation of FASB Statement No. 143 (“FIN 47”). FIN 47 clarifies the term conditional asset retirement obligation and
requires a liability to be recorded if the fair value of the obligation can be reasonably estimated. The types of asset
retirement obligations that are covered by FIN 47 are those for which an entity has a legal obligation to perform an asset
retirement activity; however, the timing and/or method of settling the obligation are conditional on a future event that may
or may not be within the control of the entity. FIN 47 also clarifies when an entity would have sufficient information to
reasonably estimate the fair value of an asset retirement obligation. FIN 47 is effective for fiscal years ending after
December 15, 2005. We expect the adoption of FIN 47 will not have a material impact on our consolidated financial
statements.
In October 2005, the FASB issued Staff Position 13-1, Accounting for Rental Costs Incurred During a Construction Period
(“FSP 13-1”). FSP 13-1 is effective for the first fiscal period beginning after December 15, 2005 and requires that rental
costs associated with ground or building operating leases that are incurred during a construction period be recognized as
rental expense. We expect the adoption of this Staff Position will not have a material impact on our operating results or
financial condition.
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