U-Haul 2007 Annual Report Download - page 25

19
S
he results of SAC Holding II in the
, as required by FIN 46(R).
C
ju
ay differ from these estimates under different assumptions and conditions; such
d
we deem most critical to us, and
jective or complex judgments include the following:
P
dresses the policy when a company owns a majority of the voting or similar rights
an
a variable interest in the entity, and whether or
n
al 2007, 2006 and 2005 include the accounts of AMERCO, its
w
ficiary. Accordingly, the Company continued to include SAC Holdings in its consolidated financial
statements.
AC Holding II Operating Segment
SAC Holding Corporation and its subsidiaries, and SAC Holding II Corporation and its subsidiaries, collectively
referred to as “SAC Holdings”, own self-storage properties that are managed by U-Haul under property management
agreements and act as independent U-Haul rental equipment dealers. AMERCO, through its subsidiaries, has
contractual interests in certain SAC Holdings’ properties entitling AMERCO to potential future income based on the
financial performance of these properties. With respect to SAC Holding II, AMERCO is considered the primary
beneficiary of these contractual interests. Consequently, we include t
consolidated financial statements of AMERCO
ritical Accounting Policies and Estimates
The Company’ s financial statements have been prepared in accordance with the accounting principles generally
accepted in the United States. The methods, estimates and judgments we use in applying our accounting policies
can have a significant impact on the results we report in our financial statements. Note 3 “Accounting Policies” to
the “Notes to Consolidated Financial Statements” in “Item 8: Financial Statements and Supplementary Data” of this
Form 10-K summarizes the significant accounting policies and methods used in the preparation of our consolidated
financial statements and related disclosures. Certain accounting policies require us to make difficult and subjective
dgments and assumptions, often as a result of the need to make estimates of matters that are inherently uncertain.
Below we have set forth, with a detailed description, the accounting policies that we deem most critical to us and
that require management’ s most difficult and subjective judgments. These estimates are based on historical
experience, observance of trends in particular areas, information and valuations available from outside sources and
on various other assumptions that are believed to be reasonable under the circumstances and which form the basis
for making judgments about the carrying values of assets and liabilities that are not readily apparent from other
sources. Actual amounts m
ifferences may be material.
We also have other policies that we consider key accounting policies, such as revenue recognition; however, these
policies do not meet the definition of critical accounting estimates, because they do not generally require us to make
estimates or judgments that are difficult or subjective. The accounting policies that
involve the most difficult, sub
rinciples of Consolidation
The Company applies FIN 46(R), “Consolidation of Variable Interest Entities” and ARB 51 in its principles of
consolidation. FIN 46(R) addresses arrangements where a company does not hold a majority of the voting or similar
interests of a variable interest entity (VIE). A company is required to consolidate a VIE if it is determined it is the
primary beneficiary. ARB 51 ad
d exercises effective control.
As promulgated by FIN 46(R), a VIE is not self-supportive due to having one or both of the following conditions:
a) it has an insufficient amount of equity for it to finance its activities without receiving additional subordinated
financial support or b) its owners do not hold the typical risks and rights of equity owners. This determination is
made upon the creation of a variable interest and can be re-assessed should certain changes in the operations of a
VIE, or its relationship with the primary beneficiary trigger a reconsideration under the provisions of FIN 46(R).
After a triggering event occurs the most recent facts and circumstances are utilized in determining whether or not a
company is a variable interest entity, which other company(s) have
ot the company’ s interest is such that it is the primary beneficiary.
The consolidated financial statements for fisc
holly-owned subsidiaries and SAC Holding II.
In fiscal 2003 and fiscal 2002, SAC Holding Corporation and SAC Holding II (together, “SAC Holdings”) were
considered special purpose entities and were consolidated based on the provisions of Emerging Issues Task Force
(EITF) Issue No. 90-15. In fiscal 2004, the Company applied FIN 46(R) to its interests in SAC Holdings. Initially,
the Company concluded that SAC Holdings were variable interest entities (VIE’ s) and that the Company was the
primary bene