US Cellular 2008 Annual Report Download - page 170

UNITED STATES CELLULAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations—a
replacement of FASB Statement No. 141 (‘‘SFAS 141(R)’’). SFAS 141(R) replaces SFAS No. 141, Business
Combinations (‘‘SFAS 141’’). SFAS 141(R) retains the underlying concept of SFAS 141 in that all
business combinations are still required to be accounted for at fair value in accordance with the
acquisition method. However, SFAS 141(R) changes the method of applying the acquisition method in a
number of significant aspects, such as requiring the expensing of transaction costs and requiring the
acquiror to recognize 100% of the acquiree’s assets and liabilities, rather than a proportional share, for
acquisitions of less than 100% of a business. SFAS 141(R) is effective on a prospective basis for all
business combinations for which the acquisition date is on or after January 1, 2009, with the exception of
the accounting for valuation allowances on deferred taxes and acquired tax contingencies. SFAS 141(R)
amends SFAS 109, Accounting for Income Taxes, such that adjustments made to valuation allowances on
deferred taxes and acquired tax contingencies associated with acquisitions that closed prior to the
effective date of SFAS 141(R) also would be determined in accordance with the provisions of
SFAS 141(R). U.S. Cellular adopted SFAS 141(R) effective January 1, 2009. The provisions of
SFAS 141(R) related to business combinations are applicable to nonrecurring transactions which makes
the impact on future transactions indeterminable until such transactions occur. Upon its adoption of
SFAS 141(R), U.S. Cellular expensed all transaction costs incurred and capitalized in 2008 for any
business combination that did not close until after January 1, 2009. This treatment did not have a
significant impact on U.S. Cellular’s financial position or results of operations.
In December 2007, the FASB issued SFAS No. 160, Consolidated Financial Statements, Including
Accounting and Reporting of Noncontrolling Interests in Subsidiaries—a replacement of ARB No. 51
(‘‘SFAS 160’’). SFAS 160 amends Accounting Research Bulletin No. 51, Consolidated Financial
Statements, as amended by SFAS No. 94, Consolidation of All Majority Owned Subsidiaries, to establish
new standards that will govern the accounting and reporting of (1) noncontrolling interests (commonly
referred to as minority interests) in partially owned consolidated subsidiaries and (2) the loss of control of
subsidiaries. Generally, the adoption of FAS 160 impacts the location of where items are classified in the
financial statements rather than the amounts recorded. For instance, SFAS 160 clarifies that a
noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be
reported in the balance sheet as a component of shareholders’ equity. Previously, minority interests
generally were reported in the balance sheet as a separate caption between non-current liabilities and
shareholders’ equity. In addition, SFAS 160 clarifies that consolidated net income should include
amounts attributable to both the parent and the noncontrolling interest. Previously, net income
attributable to the noncontrolling interest was reported as an expense or other deduction in arriving at
consolidated net income. SFAS 160 also establishes that once control of a subsidiary is obtained,
changes in ownership interests in that subsidiary that do not result in a loss of control shall be
accounted for as equity transactions, not as step acquisitions under SFAS 141. Finally, SFAS 160 clarifies
that losses will now be attributed to noncontrolling interest holders even if that means that their equity
balances would be reduced to amounts less than zero. Previous accounting rules generally did not allow
the equity balance of a noncontrolling interest holder to be reduced to an amount less than zero. The
provisions of SFAS 160 are to be applied prospectively beginning January 1, 2009 except for the
presentation and disclosure requirements, which will be applied retrospectively to all periods presented
in U.S. Cellular’s financial statements issued on or after January 1, 2009. U.S. Cellular adopted SFAS 160
effective January 1, 2009. Since U.S. Cellular has significant noncontrolling interests, this standard will
affect the presentation and disclosure of U.S. Cellular’s noncontrolling interests, but generally not the
recorded amount, as discussed in this paragraph.
In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging
Activities—an amendment of FASB Statement No. 133 (‘‘SFAS 161’’). SFAS 161 expands the disclosure
requirements for derivative instruments and hedging activities. The Statement specifically requires entities
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