iHeartMedia 2004 Annual Report Download - page 69

New Accounting Pronouncements
The SEC staff issued Staff Announcement No. D-108 at the September 2004 meeting of the Emerging Issues Task Force (“EITF”). D-108
states that the residual method should no longer be used to value intangible assets other than goodwill. Rather, a direct method should be used
to determine the fair value of all intangible assets required to be recognized under Statement of Financial Accounting Standards No. 141,
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usiness Combinations. Registrants who have applied the residual method to the valuation of intangible assets for purposes of impairment
testing under Statement 142 shall perform an impairment test using a direct value method on all intangible assets that were previously valued
using the residual method by no later than the beginning of their first fiscal year beginning after December 15, 2004. The Company adopted D-
108 for its fiscal year ended December 31, 2004. As a result of adoption, the Company recorded a non-cash charge of $4.9 billion, net of
deferred taxes of $3.0 billion, as a cumulative effect of a change in accounting principle during the fourth quarter of 2004. See Note B for more
disclosure.
In December 2004, the Financial Accounting Standards Board (“FASB”) issued Financial Accounting Standard No. 153, Exchanges of
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onmonetary Assets, an amendment of APB Opinion No. 29 (“Statement 153”). Statement 153 eliminates the APB 29 exception for
nonmonetary exchanges of similar productive assets and replaces it with an exception for exchanges of nonmonetary assets that do not have
commercial substance. Statement 153 is effective for financial statements for fiscal years beginning after June 15, 2005. Earlier application is
permitted for nonmonetary asset exchanges occurring in fiscal periods beginning after the date of issuance. The provisions of Statement 153
should be applied prospectively. The Company expects to adopt Statement 153 for its fiscal year beginning January 1, 2006 and management
does not believe that adoption will materially impact the Company’s financial position or results of operations.
In December 2004, the FASB issued Staff Position 109-2, Accounting and Disclosure Guidance for the Foreign Repatriation Provision within
the American Jobs Creation Act of 2004 (“FSP 109-2”). FSP 109-2 allows an enterprise additional time beyond the financial reporting period
in which the Act was enacted to evaluate the effects of the Act on its plans for repatriation of unremitted earnings for purposes of applying
Financial Accounting Standard No. 109, Accounting for Income Taxes, (“Statement 109). FSP 109-2 clarifies that an enterprise is required to
apply the provisions of Statement 109 in the period, or periods, it decides on its plan(s) for reinvestment or repatriation of its unremitted
foreign earnings. FSP 109-2 requires disclosure if an enterprise is unable to reasonably estimate, at the time of issuance of its financial
statements, the related range of income tax effects for the potential range of foreign earnings that it may repatriate and requires an enterprise to
recognize income tax expense (benefit) if an enterprise decides to repatriate a portion of unremitted earnings under the repatriation provision
while it is continuing to evaluate the effects of the repatriation provision for the remaining portion of the unremitted foreign earnings. FSP 109-
2 is effective upon issuance.The Company currently has the ability and intent to reinvest any undistributed earnings of its foreign subsidiaries.
Any impact from this legislation has not been reflected in the amounts shown since the Company is reinvested for the foreseeable future.
On December 16, 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123 (revised
2004), Share-Based Payment, (“Statement 123(R)”) which is a revision of Statement of Financial Accounting Standards No. 123, Accounting
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or Stock-Based Compensation (“Statement 123”). Statement 123(R) supersedes APB Opinion No. 25, Accounting for Stock Issued to
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mployees, and amends Statement No. 95, StatementofCashFlows
. Generally, the approach in Statement 123(R) is similar to the approach
described in Statement 123. However, Statement 123(R) requires all share-based payments to employees, including grants of employee stock
options, to be recognized in the income statement based on their fair values. Pro forma disclosure is no longer an alternative. Statement 123(R)
is effective for financial statements for the first interim or annual period beginning after June 15, 2005. Early adoption is permitted in periods
in which financial statements have not yet been issued. The Company expects to adopt Statement 123(R) in the third quarter of 2005.
As permitted by Statement 123, the Company currently accounts for share-based payments to employees using Accounting Principles Board
Opinion No. 25, Accounting for Stock Issued to Employees (“APB 25”) intrinsic value method and, as such, generally recognizes no
compensation cost for employee stock options. Accordingly, the adoption of Statement 123(R)’s fair value method will have a significant
impact on the Company’s result of operations, although it will have no impact on its overall financial position. The Company is unable to
quantify the
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