U-Haul 2009 Annual Report Download - page 69

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AMERCO AND CONSOLIDATED ENTITIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Deferred Policy Acquisition Costs
Commissions and other costs that fluctuate with, and are primarily related to the acquisition or renewal of certain
insurance premiums, are deferred. For Life Insurance, 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 Dallas General Life Insurance
Company (“DGLIC”), a subsidiary of Oxford, which will file on a stand alone basis until 2012. SAC Holdings files
consolidated tax returns, which are in no way associated with AMERCO’s consolidated returns. In accordance with SFAS
109, Accounting for Income Taxes, 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.
Effective April 1, 2007, the Company adopted FASB Interpretation No. 48 (“FIN 48”), Accounting for Uncertainty in
Income Taxes, an interpretation of FAS 109.
Comprehensive Income (Loss)
Comprehensive income (loss) consists of net earnings, foreign currency translation adjustments, unrealized gains and
losses on investments, the change in fair value of cash flow hedges and the change in postretirement benefit obligation.
Adoption of New Accounting Pronouncements
Fair Value of Financial Instruments
The Company adopted SFAS 157, Fair Value Measurements (“SFAS 157”) effective April 1, 2008, its required
effective date for AMERCO. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands
disclosures about fair value measurements; however, it does not change existing guidance about whether an asset or
liability is carried at fair value. The definition of fair value according to SFAS 157 is the price that would be received for
selling an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement
date. The assets primarily affected by the adoption of SFAS 157 at the Company include the interest rate swaps held by U-
Haul to fix interest rates on its variable rate debt and the available for sale investment portfolios at Life Insurance and
RepWest. For more information please see Note 16 Fair Value Measurements of the Notes to Consolidated Financial
Statements. The adoption of SFAS 157 did not have a material impact on the Company’s consolidated financial statements.
FASB Staff Position FAS 157-1, Application of FASB Statement No. 157 to FASB Statement No. 13 and Other
Accounting Pronouncements That Address FairValue Measurements for Purposes of Lease Classification or Measurement
under Statement 13. This FASB Staff Position (FSP) amends SFAS 157 to exclude FASB Statement No. 13, Accounting for
Leases, and other accounting pronouncements that address fair value measurements for purposes of lease classification or
measurement under Statement 13. However, this scope exception does not apply to assets acquired and liabilities assumed
in a business combination that are required to be measured at fair value under FASB Statement No. 141, Business
Combinations, or No. 141 (revised 2007), Business Combinations, regardless of whether those assets and liabilities are
related to leases.
FASB Staff Position FAS 157-2, Effective Date of FASB Statement No. 157. This FASB Staff Position (FSP) delays the
effective date of SFAS 157 for nonfinancial assets and nonfinancial liabilities, except for items that are recognized or
disclosed at fair value in the financial statements on a recurring basis (at least annually). The delay is intended to allow the
Board and constituents additional time to consider the effect of various implementation issues that have arisen, or that may
arise, from the application of Statement 157.
F-14