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10. Other Income
Other income included the following for the years ended December 31:
Millions of Dollars 2005 2004 2003
Net gain on non-operating asset dispositions ................................ $135 $ 69 $ 84
Rental income ........................................................ 59 55 57
Interest income........................................................ 17 10 8
Sale of receivable fees ................................................... (23) (11) (10)
Non-operating environmental costs and other ............................... (43) (35) (61)
Total ................................................................ $145 $ 88 $ 78
11. Accounting Pronouncements
In December 2004, the FASB issued Statement No. 123(R).The statement requires that we recognize
compensation expense equal to the fair value of stock options or other share-based payments starting January 1,
2006. We adopted the statement on a modified prospective basis, using the Black-Scholes option-pricing model to
calculate the fair value of stock options. We expect that the incremental, full-year compensation expense in 2006
related to the adoption of the statement will be approximately $13 million for new awards granted after January 1,
2006 and an additional $2 million for the unvested portion of awards granted in prior years. The expense for
awards granted after implementation of Statement No. 123(R) will be based upon their grant-date fair value. The
expense for those awards will be based on the estimated number of awards that are expected to vest. That estimate
will be revised if subsequent information indicates that the actual number of awards to vest will differ from the
estimate. The estimate does not materially impact our calculation of compensation expense.
In March 2005, the FASB issued FIN 47. This interpretation clarifies that the term conditional asset
retirement obligations, as used in FASB Statement No. 143, refers to a legal obligation to perform an asset
retirement activity in which the timing or method of settlement, or both, are conditional on a future event that
may or may not be within the control of the entity. An entity must recognize a liability for the fair value of a
conditional asset retirement obligation if the fair value of the liability can be reasonably estimated. We assessed
the impact of the interpretation on our financial statements, determined that we have a legal obligation to
properly dispose of asbestos-containing materials, and recorded a $5 million liability at December 31, 2005, for
the fair value of this obligation.
In May 2005, the FASB issued FAS 154, Accounting Changes and Error Corrections, a Replacement of APB
Opinion No. 20 and FASB Statement No. 3. This statement requires retrospective application to prior periods’
financial statements of changes in accounting principle, unless it is impracticable to determine either the period-
specific effects or the cumulative effect of the change. It carries forward without change the previous guidance for
reporting the correction of an error and a change in accounting estimate. FAS 154 is effective for accounting
changes and corrections of errors made in fiscal years beginning after December 15, 2005.
In July 2005, the FASB issued an exposure draft, Accounting for Uncertain Tax Positions, an Interpretation of
FASB Statement No. 109. As drafted, the interpretation would require companies to recognize the best estimate of
the impact of a tax position only if that position is probable of being sustained during a tax audit. However, in
November 2005 the FASB voted to replace the probable threshold with a more-likely-than-not criterion when
determining if the impact of a tax position should be recorded. The FASB expects to issue a final interpretation in
the first quarter of 2006. When it is available, we will review the final interpretation to determine the impact it
may have on our Consolidated Financial Statements.
In September 2005, the FASB issued an exposure draft, Earnings per Share, an Amendment of FASB Statement
No. 128. The draft clarifies guidance for the treasury stock method, contracts that may be settled in cash or shares,
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