Mercedes 2002 Annual Report Download - page 106

100 |Notes to Consolidated Financial Statements
DaimlerChrysler adopted the provisions of SFAS 141 and
SFAS 142 as of July 1, 2001, and January 1, 2002, respective-
ly. These Statements require that goodwill acquired in a
business combination completed after June 30, 2001, and
any intangible asset determined to have an indefinite useful
life acquired after June 30, 2001, should not be amortized.
Goodwill acquired in business combinations completed
before July 1, 2001, and any intangible assets with indefinite
useful lives acquired before July 1, 2001, were amortized
until December 31, 2001.
SFAS 142 required the Group to evaluate its existing
intangible assets and goodwill and to make any necessary
reclassifications in order to conform with the new separation
requirements at the date of adoption. The Group reassessed
the estimated useful lives and residual values of all intangible
assets other than goodwill and determined that no adjust-
ments regarding amortization periods were necessary.
In connection with the transitional impairment evaluation,
SFAS 142 required DaimlerChrysler to perform an assessment
of whether there is an indication that goodwill is impaired as
of January 1, 2002. To accomplish this, DaimlerChrysler (1)
identified its reporting units, (2) determined the carrying value
of each reporting unit by assigning the assets and liabilities,
including the existing goodwill and intangible assets, to those
reporting units, and (3) determined the fair value of each
reporting unit. DaimlerChrysler completed this first step of
the transitional assessment for all of the Group’s reporting units
by June 30, 2002, and determined there was no indication
that goodwill had been impaired as of January 1, 2002. Accord-
ingly, no transitional goodwill impairment charge was
necessary.
Companies accounted for by DaimlerChrysler using the
equity method, such as EADS and MMC are also subject to
the requirements of SFAS 141 and SFAS 142. Daimler-
Chrysler’s proportionate share of its equity method investees’
(primarily EADS) transitional goodwill impairment charge
resulting from the adoption of SFAS 142 was 1159 million
(10.16 per share). This transitional impairment charge and the
related per share amount are reported as the cumulative
effect of a change in accounting principle in the Group’s
consolidated statement of income (loss) for the year ended
December 31, 2002 (see Note 10).
In June 2001, the FASB issued SFAS 143, “Accounting for
Asset Retirement Obligations.” The statement applies to legal
obligations associated with the retirement of tangible long-
lived assets that result from the acquisition, construction,
development and/or the normal operation of a long-lived
asset, except for certain obligations of lessees. SFAS 143
requires that the fair value of a liability for an asset retirement
obligation be recognized in the period in which it is incurred if
a reasonable estimate of fair value can be made. The associat-
ed asset retirement costs are capitalized as part of the carry-
ing amount of the long-lived asset and subsequently allocated
to expense over the asset’s useful life. The Group adopted
SFAS 143 on January 1, 2003. The adoption of SFAS 143 did
not have a material impact on the Group’s consolidated
financial statements.
In August 2001, the FASB issued SFAS 144, which retains
the previous requirement to recognize an impairment loss only
if the carrying amounts of long-lived assets to be held and
used are not recoverable from their expected undiscounted
future cash flows. However, goodwill is no longer required to
be allocated to these long-lived assets when determining their
carrying amounts. SFAS 144 requires that a long-lived asset
to be abandoned, exchanged for a similar productive asset, or
distributed to owners in a spin-off be considered held and
used until it is disposed. SFAS 144 requires the depreciable
life of an asset to be abandoned, be revised to its shortened
useful life. SFAS 144 requires all long-lived assets to be
disposed of by sale, be recorded at the lower of its carrying
amount or fair value less cost to sell and to cease deprecia-
tion (amortization). Thus, future operating losses from dis-
continued operations are no longer recognized before they
occur. SFAS 144 is effective January 1, 2002. The adoption of
SFAS 144 compared to previous requirements, except for good-
will, did not have an impact on the Group’s consolidated finan-
cial statements.
In December 2001, the American Institute of Certified
Public Accountants (“AICPA”) issued Statement of Position
(“SOP”) 01-06, “Accounting by Certain Entities (Including
Entities With Trade Receivables) That Lend to or Finance the
Activities of Others.” SOP 01-06 aligns accounting guidance
related to loans and trade receivables for all entities.
The measurement provisions of the Statement only apply to
financial institutions. The disclosure and classification
requirements for loans and trade receivables apply to all
entities. This SOP is effective for financial statements issued
for fiscal years beginning after December 15, 2001.