Chevron 2006 Annual Report Download - page 49

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CHEVRON CORPORATION 2006 ANNUAL REPORT 47
Required annual disclosures include a tabular reconcili-
ation of unrecognized tax benefi ts at the beginning and end
of the period; the amount of unrecognized tax benefi ts that,
if recognized, would affect the effective tax rate; the amounts
of interest and penalties recognized in the fi nancial state-
ments; any expected signifi cant impacts from unrecognized
tax benefi ts on the fi nancial statements over the subsequent
12-month reporting period; and a description of the tax years
remaining to be examined in major tax jurisdictions.
As a result of the implementation of FIN 48, the com-
pany expects to recognize an increase in the liability for
unrecognized tax benefi ts and associated interest and penal-
ties as of January 1, 2007. In connection with this increase
in liability, the company estimates retained earnings at the
beginning of 2007 will be reduced by $250 million or less.
The amount of the liability and impact on retained earnings
will depend in part on clarifi cation expected to be issued by
the FASB related to the criteria for determining the date of
ultimate settlement with a tax authority.
FASB Statement No. 157, Fair Value Measurements (FAS
157) In September 2006, the FASB issued FAS 157, which
will become effective for the company on January 1, 2008.
This standard defi nes fair value, establishes a framework for
measuring fair value and expands disclosures about fair value
measurements. FAS 157 does not require any new fair value
measurements but would apply to assets and liabilities that
are required to be recorded at fair value under other account-
ing standards. The impact, if any, to the company from the
adoption of FAS 157 in 2008 will depend on the company’s
assets and liabilities at that time that are required to be mea-
sured at fair value.
FASB Statement No. 158, Employers’ Accounting for Defi ned
Benefi t Pension and Other Postretirement Plans – an amend-
ment of FASB Statements No. 87, 88, 106 and 132(R) (FAS
158) In September 2006, the FASB issued FAS 158, which
was adopted by the company on December 31, 2006. Refer to
Note 21, beginning on page 72, for additional information.