US Bank 2001 Annual Report Download - page 58

and intangible assets subsequent to their acquisition. The
Accounting Changes
Company is required to adopt SFAS 142 on January 1,
Accounting for Derivative Instruments and Hedging 2002. The most signiÑcant changes made by SFAS 142 are
Activities Statement of Financial Accounting Standards that goodwill and indeÑnite lived intangible assets will no
No. 133 (""SFAS 133''), ""Accounting for Derivative longer be amortized and will be tested for impairment at
Instruments and Hedging Activities,'' as amended, least annually, thereafter. Any impairment charges from the
establishes accounting and reporting standards for all initial impairment test at the date of adoption would be
derivative instruments and criteria for designation and recognized as a ""cumulative eÅect of change in accounting
eÅectiveness of hedging activities. SFAS 133 requires that an principles'' in the income statement. The amortization
entity recognize all derivatives as either assets or liabilities provisions of SFAS 142 apply to goodwill and intangible
on the balance sheet and measure those instruments at fair assets acquired after June 30, 2001. With respect to
value. The changes in the fair value of the derivatives are goodwill and intangible assets acquired prior to July 1,
recognized currently in earnings unless speciÑc hedge 2001, the amortization provisions of SFAS 142 are eÅective
accounting criteria are met. If the derivative qualiÑes as a upon adoption of SFAS 142.
hedge, the accounting treatment varies based on the type of The Company will apply the amortization provisions of
risk being hedged. On January 1, 2001, the Company SFAS 142 during the Ñrst quarter of 2002. Management
adopted SFAS 133. Transition adjustments related to anticipates that applying the provisions of SFAS 141 to
adoption resulted in an after-tax loss of approximately recent acquisitions and the provisions of SFAS 142 to
$4.1 million recorded in net income and an after-tax purchase acquisitions completed prior to July 1, 2001, will
increase of $5.2 million recorded in other comprehensive increase after-tax income for the year ending December 31,
income. The transition adjustments related to adoption 2002, by approximately $200 to $210 million, or $.10 per
were not material to the Company's Ñnancial statements, diluted share. This considers the application of SFAS 142's
and as such, were not separately reported in the deÑnition of a business and the impact of reclassifying
consolidated statement of income. certain assets from goodwill to intangibles and changes in
estimated useful lives of certain intangible assets. The
Accounting for Business Combinations and Goodwill
Company has not yet fully determined the impact on
and Other Intangible Assets In June 2001, the Financial
earnings of impairments related to goodwill and indeÑnite
Accounting Standards Board issued Statement of Financial
lived intangible assets under the new guidelines required by
Accounting Standards No. 141 (""SFAS 141''), ""Business
SFAS 142. Any material impairment charge resulting from
Combinations'' and Statement of Financial Accounting
these transitional accounting rules will be reÖected as a
Standard No. 142 (""SFAS 142''), ""Goodwill and Other
""cumulative eÅect of a change in accounting principles'' in
Intangible Assets.'' SFAS 141 mandates the purchase
the Ñrst quarter of 2002. Because banking regulations
method of accounting be used for all business combinations
exclude 100 percent of goodwill from the determination of
initiated after June 30, 2001, and establishes speciÑc criteria
capital adequacy, the impact of any impairment on the
for the recognition of intangible assets separately from
Company's capital adequacy will not be signiÑcant.
goodwill. SFAS 142 addresses the accounting for goodwill
U.S. Bancorp
Note 2
56