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THE PEP BOYS—MANNY, MOE & JACK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years ended January 29, 2011, January 30, 2010 and January 31, 2009
NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
RECENT ACCOUNTING STANDARDS
In March 2007, the FASB issued guidance on accounting for split dollar life insurance
arrangements which was included in ASC 718 ‘‘Compensation—Stock Compensation.’’ This ASC
provides guidance on determining whether a liability for the postretirement benefit associated with a
collateral assignment split-dollar life insurance arrangement should be recorded. ASC 718 also provides
guidance on how a company should recognize and measure the asset in a collateral assignment split-
dollar life insurance contract. The original guidance for accounting for split dollar life insurance
arrangements was effective for fiscal years beginning after December 15, 2007. The adoption of
ASC 718 resulted in a $1.2 million net of tax charge to retained earnings on February 3, 2008.
In October 2009, the FASB issued Accounting Standards Update (‘‘ASU’’) 2009-13 ‘‘Revenue
Recognition (Topic 605)—Multiple-Deliverable Revenue Arrangements a consensus of the FASB
Emerging Issues Task Force,’’ (‘‘ASU 2009-13’’). This update eliminates the residual method of
allocation and requires that consideration be allocated to all deliverables using the relative selling price
method. ASU 2009-13 is effective for material revenue arrangements entered into or materially
modified in fiscal years beginning on or after June 15, 2010. The adoption of ASU 2009-13 did not
have a material impact on the consolidated financial statements.
In January 2010, the FASB issued ASU 2010-06 ‘‘Fair Value Measurements—Improving
Disclosures on Fair Value Measurements’’ (‘‘ASU 2010-06’’). This guidance requires new disclosures
surrounding transfers in and out of level 1 or 2 in the fair value hierarchy and also requires that the
reconciliation of level 3 inputs includes separately reported information on purchases, sales, issuances
and settlements. The increased disclosures should be reported for each class of assets or liabilities.
ASU 2010-06 also clarifies existing disclosures for the level of disaggregating, disclosures about
valuation techniques and inputs used to determine level 2 or 3 fair value measurements and includes
conforming amendments to the guidance on employers’ disclosures about postretirement benefit plan
assets. ASU 2010-06 was effective for interim and annual reporting periods beginning after
December 15, 2009 except for the disclosures about purchases, sales, issuances or settlements in the roll
forward activity for level 3 fair value measurements which are effective for interim and annual periods
beginning after December 15, 2010. The adoption of ASU 2010-06 did not have a material impact on
the Company’s consolidated financial statements.
In December 2010, the FASB issued ASU 2010-29 ‘‘Business Combinations (Topic 805)—
Disclosure of Supplementary Pro Forma Information for Business Combinations’’ (ASU 2010-29). This
accounting standard update clarifies that SEC registrants presenting comparative financial statements
should disclose in their pro forma information revenue and earnings of the combined entity as though
the current period business combinations had occurred as of the beginning of the comparable prior
annual reporting period only. The update also expands the supplemental pro forma disclosures to
include a description of the nature and amount of material, nonrecurring pro forma adjustments
directly attributable to the business combination included in the reported pro forma revenue and
earnings. ASU 2010-29 is effective prospectively for material (either on an individual or aggregate
basis) business combinations entered into in fiscal years beginning on or after December 15, 2010 with
early adoption permitted. The Company does not believe the adoption of those requirements of
ASU 2010-29 will have a material impact on the consolidated results of operations and financial
condition.
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