U-Haul 2011 Annual Report Download - page 24

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19
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 may differ
from these estimates under different assumptions and conditions; such differences 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 we deem most critical to us, and involve the most difficult, subjective or complex judgments
include the following:
Principles of Consolidation
The Company applies ASC 810 - Consolidation (“ASC 810”) in its principles of consolidation. ASC 810
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 has determined it is the
primary beneficiary. ASC 810 also addresses the policy when a company owns a majority of the voting or
similar rights and exercises effective control.
As promulgated by ASC 810, a VIE is not self-supportive due to having one or both of the following
conditions: i) it has an insufficient amount of equity for it to finance its activities without receiving
additional subordinated financial support or ii) 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 is re-assessed on an on-
going basis should certain changes in the operations of a VIE, or its relationship with the primary
beneficiary trigger a reconsideration under the provisions of ASC 810. After a triggering event occurs the
most recent facts and circumstances are utilized in determining whether or not a company is a VIE, which
other company(s) have a variable interest in the entity, and whether or not the company’s interest is such
that it is the primary beneficiary.
In fiscal 2003 and fiscal 2002, SAC Holdings were considered special purpose entities and were
consolidated based on the provisions of Emerging Issues Task Force Issue 90-15, Impact of
Nonsubstantive Lessors, Residual Value Guarantees and Other Provisions in Leasing Transactions. In
fiscal 2004, the Company evaluated its interests in SAC Holdings and the Company concluded that SAC
Holdings were VIE’s and that the Company was the primary beneficiary. Accordingly, the Company
continued to include SAC Holdings in its consolidated financial statements.
Triggering events in February and March of 2004 for SAC Holding Corporation required AMERCO to
reassess its involvement in specific SAC Holding Corporation entities. During these reassessments it was
concluded that AMERCO was no longer the primary beneficiary, resulting in the deconsolidation of SAC
Holding Corporation in fiscal 2004.
In November 2007, Blackwater contributed additional capital to its wholly-owned subsidiary, SAC
Holding II. This contribution was determined by us to be material with respect to the capitalization of SAC
Holding II; therefore, triggering a requirement under FASB Interpretation No. 46(R) for us to reassess the
Company’s involvement with those entities. This required reassessment led to the conclusion that SAC
Holding II had the ability to fund its own operations and execute its business plan without any future
subordinated financial support; therefore, the Company was no longer the primary beneficiary of SAC
Holding II as of the date of Blackwater’s contribution.
Accordingly, at the date AMERCO ceased to be considered the primary beneficiary of SAC Holding II
and its current subsidiaries, it deconsolidated these entities. The deconsolidation was accounted for as a
distribution of SAC Holding II’s interests to the sole shareholder of the SAC entities. Because of
AMERCO’s continuing involvement with SAC Holding II and its subsidiaries, the distribution does not
qualify as discontinued operations.
It is possible that SAC Holdings could take actions that would require us to re-determine whether SAC
Holdings remains a VIE and we continually monitor whether we have become the primary beneficiary of
SAC Holdings. None of the events delineated in ASC 810-10-35-4 which would require a redetermination
occurred during the period being reported upon in this Form 10-K. Should we determine in the future that
we are the primary beneficiary of SAC Holdings, we could be required to consolidate some or all of SAC
Holdings within our financial statements.