Eli Lilly 2007 Annual Report Download - page 39

FINANCIALS
37
combination either in income from continuing operations in the period of the combination or directly in contributed
capital, depending on the circumstances. This Statement is effective for us for business combinations for which the
acquisition date is on or after January 1, 2009.
In December 2007, in conjunction with SFAS 141(R), the FASB issued SFAS No. 160, Accounting for Noncontrol-
ling Interests. This Statement amends Accounting Research Bulletin No. 51, Consolidated Financial Statements
(ARB 51), by requiring companies to report a noncontrolling interest in a subsidiary as equity in its consolidated
fi nancial statements. Disclosure of the amounts of consolidated net income attributable to the parent and the
noncontrolling interest will be required. This Statement also clarifi es that transactions that result in a change in a
parent’s ownership interest in a subsidiary that do not result in deconsolidation will be treated as equity transac-
tions, while a gain or loss will be recognized by the parent when a subsidiary is deconsolidated. This Statement is
effective for us January 1, 2009, and we do not anticipate the implementation to be material to our consolidated
fi nancial position or results of operations.
In December 2007, the FASB ratifi ed the consensus reached by the Emerging Issues Task Force (EITF) on Issue
No. 07-1 (EITF 07-1), Accounting for Collaborative Arrangements. EITF 07-1 defi nes collaborative arrangements
and establishes reporting requirements for transactions between participants in a collaborative arrangement and
between participants in the arrangement and third parties. This Issue is effective for us beginning January 1, 2009
and will be applied retrospectively to all prior periods presented for all collaborative arrangements existing as of
the effective date. While we have not yet completed our analysis, we do not anticipate the implementation of this
Issue to be material to our consolidated fi nancial position or results of operations.
In June 2007, the FASB ratifi ed the consensus reached by the EITF on Issue No. 07-3 (EITF 07-3), Accounting
for Nonrefundable Advance Payments for Goods or Services Received for Use in Future Research and Development
Activities. Pursuant to EITF 07-3, nonrefundable advance payments for goods or services that will be used or ren-
dered for future research and development activities should be deferred and capitalized. Such amounts should be
recognized as an expense when the related goods are delivered or services are performed, or when the goods or
services are no longer expected to be received. This Issue is effective for us beginning January 1, 2008, and is to be
applied prospectively for contracts entered into on or after the effective date. We do not anticipate the implementa-
tion of this Issue to be material to our consolidated fi nancial position or results of operations.
In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Lia-
bilities. SFAS 159 permits entities to choose to measure many fi nancial instruments and certain other items at fair
value. The objective is to improve fi nancial reporting by providing entities with the opportunity to mitigate volatility
in reported earnings caused by measuring related assets and liabilities differently without having to apply complex
hedge accounting provisions. This Statement is effective for us beginning January 1, 2008, if adopted; however, we
do not anticipate adopting this Statement.
We adopted the provisions of FASB Interpretation (FIN) No. 48, Accounting for Uncertainty in Income Taxes,
on January 1, 2007. FIN 48 prescribes a recognition threshold and measurement attribute for the fi nancial state-
ment recognition and measurement of a tax position taken or expected to be taken in a tax return. See Note 11 for
further discussion of the impact of adopting this Interpretation.
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. SFAS 157 defi nes fair value, es-
tablishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements.
This Statement is effective for us beginning January 1, 2008, and applies to interim periods. We do not anticipate the
implementation of this Statement will be material to our consolidated fi nancial position or results of operations.
In 2005, the FASB issued FIN 47, Accounting for Conditional Asset Retirement Obligations, an interpretation of
FASB Statement No. 143. FIN 47 requires us to record the fair value of a liability for conditional asset retirement
obligations in the period in which it is incurred, which is adjusted to its present value each subsequent period. In
addition, we are required to capitalize a corresponding amount by increasing the carrying amount of the related
long-lived asset, which is depreciated over the useful life of the related long-lived asset. The adoption of FIN 47
on December 31, 2005 resulted in a cumulative effect of a change in accounting principle of $22.0 million, net of
income taxes of $11.8 million.