American Home Shield 2009 Annual Report Download - page 65

Table of Contents
Other Pronouncements
In September 2006, the FASB issued guidance under ASC Topic 820, "Fair Value Measurements and Disclosures", which provides a single definition of
fair value, together with the framework for measuring it, and requires additional disclosure about the use of fair value to measure assets and liabilities. It also
emphasizes that fair value is a market-based measurement, not an entity-specific measurement, and sets out a fair value hierarchy with the highest level being
quoted prices in active markets. In February 2008, the FASB issued new guidance under ASC 820 which delayed the effective date for fair value
measurement and disclosure for all nonrecurring fair value measurements of nonfinancial assets and liabilities until fiscal years beginning after November 15,
2008 (calendar year 2009). The Company partially adopted the provisions of this guidance with respect to its financial assets and liabilities that are measured
at fair value effective January 1, 2008. The Company included the remaining provisions of this guidance in the preparation of the accompanying Consolidated
Financial Statements. In October 2008, the FASB issued new guidance under ASC 820 which clarifies the application of fair value measurements and
disclosures in cases where the market for the asset is not active. This guidance was effective upon issuance. In April 2009, the FASB issued additional
guidance under ASC 820 which provides guidance on estimating the fair value of an asset or liability (financial and non-financial) when the volume and level
of activity for the asset or liability have significantly decreased, and on identifying transactions that are not orderly. In August 2009, the FASB issued
Accounting Standards Update ("ASU")2009-05, "Measuring Liabilities at Fair Value", which further amends ASC 820 by providing clarification for
circumstances in which a quoted price in an active market for the identical liability in not available. The adoption of these standards did not have a material
effect on the Company's Consolidated Financial Statements.
In December 2007, the FASB issued guidance under ASC Topic 805, "Business Combinations". This guidance significantly changes the accounting for
business combinations and is effective for business combinations finalized in fiscal years beginning after December 15, 2008 (calendar year 2009). This
guidance changes the method for applying the accounting for business combinations in a number of significant respects including the requirement to expense
transaction fees and expected restructuring costs as incurred, rather than including these amounts in the allocated purchase price; the requirement to recognize
the fair value of contingent consideration at the acquisition date, rather than the expected amount when the contingency is resolved; the requirement to
recognize the fair value of acquired in-process research and development assets at the acquisition date, rather than immediately expensing; and the
requirement to recognize a gain in relation to a bargain purchase price, rather than reducing the allocated basis of long-lived assets. In addition, this standard
requires that changes in the amount of acquired tax attributes be included in the Company's results of operations, rather than adjusting the allocated purchase
price. This standard was effective on January 1, 2009 and is being applied prospectively to business combinations that have an acquisition date on or after
January 1, 2009. While this standard applies only to business combinations with an acquisition date after its effective date, the amendments to guidance under
ASC Topic 740, "Income Taxes", with respect to deferred tax asset valuation allowances and liabilities for income tax uncertainties, was applied to all
deferred tax valuation allowances and liabilities for income tax uncertainties recognized in prior business combinations. In April 2009, the FASB issued new
guidance under ASC 805, "Business Combinations", which amends and clarifies business combination accounting guidance to address application on initial
recognition and measurement, subsequent measurement and accounting, and disclosure of assets and liabilities arising from contingencies in a business
combination. The provisions of the above accounting standards for business combinations will not impact the Company's Consolidated Financial Statements
for prior periods. The Company adopted the above standards during the first quarter of 2009. The adoption of these standards did not have a material effect on
the Company's Consolidated Financial Statements.
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