BT 2003 Annual Report Download - page 50

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Interpretation of Accounting Research Bulletin (ARB)
No. 51’’. FIN 46 requires the primary beneficiary to
consolidate a variable interest entity (VIE) if it has a
variable interest that will absorb a majority of the
entity’s expected losses if they occur, receive a
majority of the entity’s expected residual returns if they
occur, or both. FIN 46 applies immediately to VIEs
created after 31 January 2003, and to VIEs in which
the entity obtains an interest after that date. This
statement is not expected to have a material impact
on BT’s consolidated financial statements.
In November 2002, the Emerging Issues Task
Force (EITF) reached a consensus on EITF 00-21,
‘‘Revenue Arrangements with Multiple Deliverables’’.
The consensus addresses how to account for
arrangements that may involve multiple revenue
generating activities, for example, the delivery or
performance of multiple products, services, and/or
rights to use assets. In applying this guidance, separate
contracts with the same party, entered into at or near
the same time, will be presumed to be a package, and
the consideration will be measured and allocated to the
separate units based on their relative fair values. This
consensus guidance will be applicable to agreements
entered into after 15 June 2003. BT is currently
evaluating the impact of this new pronouncement.
In January 2003, the EITF reached a consensus on
EITF 02-18, ‘‘Accounting for Subsequent Investments
in an Investee after Suspension of Equity Method Loss
Recognition’’. This consensus states that if the
additional investment, in whole or in part, represents
the funding of prior losses, the investor should
recognise previously suspended losses. When
appropriate to recognise prior losses, the amount
recognised would be limited to the amount of the
additional investment determined to represent the
funding of prior losses. The consensus is effective for
additional investments made after 5 February 2003.
This consensus is not expected to have a material
impact on BT’s consolidated financial statements.
Financial review
BT Annual Report and Form 20-F 2003 49