Travelzoo 2002 Annual Report Download - page 50

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TRAVELZOO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Issue No. 00-02 did not have a signiÑcant impact on the combined Ñnancial statements. Subsequent to the
adoption of EITF No. 00-02, no internal website development costs that qualify for capitalization have been
incurred.
(l) Recent Accounting Pronouncements
In July 2001, the Financial Accounting Standards Board (FASB) issued SFAS No. 141, Business
Combinations and SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No. 141 provides guidance on
the accounting for a business combination at the date a business combination is completed. The statement
requires the use of the purchase method of accounting for all business combinations initiated after June 30,
2001, thereby eliminating use of the pooling-of-interests method. The Company adopted SFAS No. 141 on
July 1, 2001. The adoption did not have an eÅect on the combined Ñnancial statements. SFAS No. 142
provides guidance on how to account for goodwill and intangible assets after an acquisition is completed. The
most substantive change is that goodwill will no longer be amortized but instead will be tested for impairment
periodically. The Company adopted SFAS No. 142 as of the beginning of 2002 and the eÅect of adoption did
not have a material impact on the condensed consolidated Ñnancial statements.
In August 2001, the Financial Accounting Standards Board issued SFAS No. 143, Accounting for Asset
Retirement Obligations. SFAS No. 143 addresses Ñnancial accounting and reporting for obligations associated
with retirement of tangible long-lived assets and the associated retirement costs. The Company will adopt
SFAS No. 143 at the beginning of 2003, and the adoption is not expected to have a material impact on the
combined Ñnancial statements.
In October 2001, the Financial Accounting Standards Board issued SFAS No. 144, Impairment of Long-
Lived Assets. SFAS No. 144 supersedes SFAS No. 121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed of. SFAS No. 144 retains the requirements of SFAS No. 121 to
(a) recognize an impairment loss only if the carrying amount of a long-lived asset is not recoverable from its
undiscounted cash Öows and (b) measure an impairment loss as the diÅerence between the carrying amount
and the fair value of the asset. SFAS No. 144 removes goodwill from its scope. SFAS No. 144 is applicable to
the Company's Ñnancial statements beginning in 2002. The adoption of this statement did not have a material
impact on the consolidated Ñnancial statements.
In April 2002, the Financial Accounting Standards Board issued SFAS No. 145, Rescission of FASB
Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections. SFAS
No. 145 rescinds the requirement that all gains and losses from extinguishment of debt be classiÑed as an
extraordinary item. Additionally, SFAS No. 145 requires that certain lease modiÑcations that have economic
eÅects similar to sale-leaseback transactions be accounted for in the same manner as sale-leaseback
transactions. SFAS No. 145 is eÅective for the Company beginning in 2003, and the eÅect of adoption is not
expected to have a material impact on the consolidated Ñnancial statements.
In July 2002, the FASB issued Statement No. 146, Accounting for Costs Associated with Exit or Disposal
Activities. This Statement requires recording costs associated with exit or disposal activities at their fair values
when a liability has been incurred. Under previous guidance, certain exit costs were accrued upon
management's commitment to an exit plan, which is generally before an actual liability has been incurred. The
requirements of this Statement are eÅective prospectively for exit or disposal activities initiated after
December 31, 2002; however, early application of the Statement is encouraged. The Company's adoption of
Statement 146 will not have a material impact on its historical Ñnancial position or results of operations.
In November 2002, the FASB issued Interpretation No. 45, Guarantor's Accounting and Disclosure
Requirements for Guarantees, Including Guarantees of Indebtedness of Others (""FIN 45''). FIN 45 requires
the Company to recognize, at the inception of a guarantee, a liability for the fair value of the obligation
undertaken in the issuance of the guarantee. The disclosure requirements eÅective for the year ending
34