U-Haul 2005 Annual Report Download - page 58

57 I AMERCO ANNUAL REPORT
expenses฀as฀well฀as฀amounts฀recoverable฀from฀re-insurers฀
on฀unpaid฀losses฀are฀charged฀or฀credited฀to฀expense฀in฀the฀
periods฀in฀which฀they฀are฀made.
Revenue Recognition
Self-moving฀ rentals฀ are฀ recognized฀ for฀ the฀ period฀ that฀
trucks฀ and฀ moving฀ equipment฀ are฀ rented.฀ Self-storage฀
revenues฀are฀recognized฀based฀on฀the฀number฀of฀storage฀
contract฀ days฀ earned.฀ Sales฀ of฀ self-moving฀ and฀ self-
storage฀related฀ products฀are฀recognized฀at฀the฀ time฀that฀
title฀passes฀and฀the฀customer฀accepts฀delivery.฀Insurance฀
premiums฀are฀recognized฀over฀the฀policy฀periods.฀Interest฀
and฀investment฀income฀are฀recognized฀as฀earned.
Advertising
All฀advertising฀costs฀are฀expensed฀as฀incurred.฀Advertising฀
expense฀was฀$32.9฀million฀in฀fiscal฀2005,฀$32.7฀million฀
in฀fiscal฀2004฀and฀$39.9฀million฀in฀fiscal฀2003.
Deferred Policy Acquisition Costs
Commissions฀and฀other฀costs฀that฀fluctuate฀with,฀and฀are฀
primarily฀ related฀ to฀ the฀ production฀ of฀ future฀ insurance฀
premiums,฀ are฀ deferred.฀ For฀ Oxford,฀ these฀ costs฀ are฀
amortized฀in฀relation฀to฀revenue฀such฀that฀costs฀are฀realized฀
as฀a฀constant฀percentage฀of฀revenue.฀For฀RepWest,฀these฀
costs฀ are฀ amortized฀ over฀ the฀ related฀ contract฀ periods,฀
which฀generally฀do฀not฀exceed฀one฀year.
Environmental Costs
Liabilities฀are฀recorded฀when฀environmental฀assessments฀
and฀ remedial฀ efforts,฀ if฀ applicable,฀ are฀ probable฀ and฀
the฀ costs฀ can฀ be฀ reasonably฀ estimated.฀ The฀ amount฀ of฀
the฀ liability฀ is฀ based฀ on฀ management’s฀ best฀ estimate฀
of฀ undiscounted฀ future฀ costs.฀ Certain฀ recoverable฀
environmental฀costs฀related฀to฀the฀removal฀of฀underground฀
storage฀tanks฀or฀related฀contamination฀are฀capitalized฀and฀
amortized฀over฀the฀estimated฀useful฀lives฀of฀the฀properties.฀
These฀costs฀improve฀the฀safety฀or฀efficiency฀of฀the฀property฀
or฀are฀incurred฀in฀preparing฀the฀property฀for฀sale.
Income Taxes
AMERCO฀ files฀ a฀ consolidated฀ tax฀ return฀ with฀ all฀ of฀
its฀ legal฀ subsidiaries,฀ except฀ for฀ CFLIC,฀ which฀ files฀
on฀ a฀ stand฀ alone฀ basis.฀ SAC฀ Holding฀ II฀ and฀ its฀ legal฀
subsidiaries฀and฀ SAC฀ Holding฀ and฀its฀legal฀subsidiaries฀
file฀ seperate฀ consolidated฀ returns,฀ and฀ their฀ returns฀
are฀ not฀ consolidated฀ with฀ AMERCO.฀ In฀ accordance฀
with฀ SFAS฀ No.฀ 109,฀ the฀ provision฀ for฀ income฀ taxes฀
reflects฀ deferred฀ income฀ taxes฀ resulting฀ from฀ changes฀
in฀temporary฀differences฀between฀the฀tax฀basis฀of฀assets฀
and฀liabilities฀and฀their฀reported฀amounts฀in฀the฀financial฀
statements.
Comprehensive Income/(Loss)
Comprehensive฀ income/(loss)฀ consists฀ of฀ net฀ income,฀
foreign฀ currency฀ translation฀ adjustments,฀ unrealized฀
gains฀and฀losses฀on฀investments฀and฀the฀fair฀market฀value฀
of฀interest฀rate฀hedges,฀net฀of฀the฀related฀tax฀effects.
Recent Accounting Pronouncements
On฀ June฀ 1,฀ 2005,฀ the฀ Financial฀ Accounting฀ Standards฀
Board฀ (“FASB”)฀ issued฀ Statement฀ of฀ Financial฀
Accounting฀ Standards฀ No.฀ 154,฀ “Accounting฀ Changes฀
and฀Error฀Corrections฀(“SFAS฀No.฀154”),฀a฀replacement฀
of฀ APB฀ Opinion฀ No.฀ 20,฀ “Accounting฀ Changes”฀ and฀
FASB฀Statement฀No.฀3,฀“Reporting฀Accounting฀Changes฀
in฀Interim฀Financial฀Statements.”฀SFAS฀No.฀154฀applies฀
to฀ all฀ voluntary฀ changes฀ in฀ accounting฀ principle฀ and฀
changes฀the฀requirements฀for฀accounting฀for฀and฀reporting฀
a฀change฀in฀accounting฀principle.฀SFAS฀No.฀154฀requires฀
the฀ retrospective฀ application฀ to฀ prior฀ periods’฀ financial฀
statements฀ of฀the฀ direct฀ effect฀of฀a฀ voluntary฀ change฀in฀
accounting฀principle฀unless฀it฀is฀impracticable.฀APB฀No.฀
20฀ required฀ that฀ most฀ voluntary฀ changes฀ in฀ accounting฀
principle฀be฀recognized฀by฀including฀in฀net฀income฀of฀the฀
period฀ of฀ the฀ change฀ the฀ cumulative฀ effect฀ of฀ changing฀
to฀ the฀ new฀ accounting฀ principle.฀ The฀ FASB฀ stated฀ that฀
SFAS฀ No.฀ 154฀ improves฀ financial฀ reporting฀ because฀
its฀ requirements฀ enhance฀ the฀ consistency฀ of฀ financial฀
information฀ between฀ periods.฀ Unless฀ early฀ adoption฀
is฀ elected,฀ SFAS฀ No.฀ 154฀ is฀ effective฀ for฀ fiscal฀ years฀
beginning฀ after฀ December฀ 15,฀ 2005.฀ Early฀ adoption฀ is฀
permitted฀for฀fiscal฀ years฀beginning฀after฀June฀1,฀2005.฀
SFAS฀No.฀154฀does฀not฀change฀the฀transition฀provisions฀
of฀ any฀ existing฀ accounting฀ pronouncements,฀ including฀
those฀that฀are฀in฀a฀transition฀phase฀as฀of฀the฀effective฀date฀
of฀this฀statement.฀We฀do฀not฀believe฀that฀the฀adoption฀of฀
SFAS฀No.฀154฀will฀have฀a฀material฀effect฀on฀our฀results฀
of฀operations฀or฀financial฀position.
On฀ December฀ 16,฀ 2004,฀ the฀ FASB฀ issued฀ Statement฀ of฀
Financial฀Accounting฀Standards฀No.฀123฀(revised฀2004),฀
“Share-Based฀Payment”฀(“SFAS฀No.฀123R”).฀SFAS฀No.฀
123R฀is฀a฀revision฀of฀FASB฀Statement฀No.฀123,฀“Accounting฀
for฀ Stock-Based฀ Compensation”฀ (“SFAS฀ No.฀ 123”)฀ and฀
supersedes฀APB฀Opinion฀No.฀25,฀“Accounting฀for฀Stock฀
Issued฀ to฀ Employees,”฀ and฀ its฀ related฀ implementation฀
guidance.฀SFAS฀No.฀123R฀requires฀companies฀to฀measure฀
and฀recognize฀compensation฀expense฀for฀all฀stock-based฀
payments฀ at฀ fair฀ value.฀ Stock-based฀ payments฀ include฀
stock฀ option฀ grants.฀ SFAS฀ No.฀ 123R฀ is฀ effective฀ for฀
public฀companies฀for฀annual฀periods฀beginning฀after฀June฀
15,฀ 2005.฀ Early฀ adoption฀ is฀ encouraged฀ and฀ retroactive฀
application฀ of฀ the฀ provisions฀ of฀ SFAS฀ No.฀ 123R฀ to฀ the฀
beginning฀ of฀ the฀ fiscal฀ year฀ that฀ includes฀ the฀ effective฀
date฀ is฀ permitted,฀ but฀ not฀ required.฀ We฀ do฀ not฀ believe฀
that฀the฀adoption฀of฀SFAS฀No.฀123R฀will฀have฀a฀material฀
effect฀on฀our฀results฀of฀operations฀or฀financial฀position.
On฀ November฀ 24,฀ 2004,฀ the฀ FASB฀ issued฀ Statement฀ of฀
Financial฀Accounting฀Standards฀No.฀151฀“Inventory฀Costs฀
—฀ an฀ amendment฀ of฀ ARB฀ No.฀ 43,฀ Chapter฀ 4”฀ (“SFAS฀
Amerco and Consolidated Entities
Notes to Consolidated Financial Statements, continued