AutoNation 2007 Annual Report Download - page 59

Table of Contents
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New Accounting Pronouncements
In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS No. 141R”). SFAS No. 141R is a
revision to SFAS No. 141 and includes substantial changes to the acquisition method used to account for business combinations (formerly the
“purchase accounting” method), including broadening the definition of a business, as well as revisions to accounting methods for contingent
consideration and other contingencies related to the acquired business, accounting for transaction costs, and accounting for adjustments to
provisional amounts recorded in connection with acquisitions. SFAS No. 141R retains the fundamental requirement of SFAS No. 141 that the
acquisition method of accounting be used for all business combinations and for an acquirer to be identified for each business combination.
SFAS No. 141R shall be applied prospectively to business combinations for which the acquisition date is on or after the beginning of the first
annual reporting period beginning on or after December 15, 2008. We are currently evaluating the requirements of SFAS No. 141R.
In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities — Including an
Amendment of FASB Statement No. 115” (“SFAS No. 159”). SFAS No. 159 permits entities to choose to measure certain financial assets and
liabilities at fair value. Unrealized gains and losses, arising subsequent to adoption, are reported in earnings. SFAS No. 159 is effective for
fiscal years beginning after November 15, 2007. We are currently evaluating the impact of adopting SFAS No. 159, if elected, on our
Consolidated Financial Statements.
As of January 1, 2007, we adopted FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — an Interpretation of FASB
Statement No. 109” (“FIN 48”). See Note 11, Income Taxes, of Notes to Consolidated Financial Statements for further discussion.
In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS No. 157”). SFAS No. 157 defines fair value
and applies to other accounting pronouncements that require or permit fair value measurements and expands disclosures about fair value
measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years for
financial assets and liabilities, as well as for any other assets and liabilities that are carried at fair value on a recurring basis in financial
statements. The FASB has provided a one year deferral for the implementation of SFAS No. 157 for non-financial assets and liabilities that are
not required to be measured at fair value on a recurring basis. We are currently evaluating the impact of adopting SFAS No. 157 on our
Consolidated Financial Statements.
In March 2006, the EITF reached a consensus on EITF Issue No. 06-3, “How Taxes Collected from Customers and Remitted to
Governmental Authorities Should Be Presented in the Income Statement (That is, Gross versus Net Presentation)” (“EITF 06-3”), which allows
companies to adopt a policy of presenting taxes in the income statement on either a gross or net basis. Taxes within the scope of this EITF
include taxes that are imposed on a revenue transaction between a seller and a customer, for example, sales taxes, use taxes, value-added taxes,
and some types of excise taxes. As of January 1, 2007, we adopted EITF 06-3 for interim and annual reporting periods. EITF 06-3 did not
impact the method for recording and reporting these sales taxes in our Consolidated Financial Statements as our policy is to exclude all such
taxes from revenue.
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