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In July 2001, the Financial
Accounting Standards Board (FASB) issued SFAS No. 143
‘‘Accounting for Asset Retirement Obligations’’ which
is applicable to financial years commencing after 15
June 2002. SFAS No. 143 requires that the fair value
of a liability for an asset retirement obligation be
recognised in the period in which it is incurred if
it is possible to make a reasonable estimate of the
fair value. The associated asset retirement costs are
required to be capitalised as part of the carrying value
of the long lived asset. The adoption of SFAS No. 143
is not expected to have a material impact on the consolidated
financial statements.
In July 2002, the FASB issued SFAS No. 146, ‘‘Accounting
for Costs Associated with Exit or Disposal Activities’’
which is applicable to disposals initialised after 31
December 2002. The Statement requires costs associated
with exit or disposal activities to be recognised when
the costs are incurred rather than at the date of the
commitment to an exit or disposal plan. Accordingly,
we have reflected the impact of SFAS No. 146 in the
2003 financial year. SFAS No. 146 may apply to future
activities which are not currently envisaged and accordingly
it is not possible to assess the impact of SFAS No.
146 on any such activities at this time.
In December 2002, the FASB issued SFAS No. 148, ‘‘Accounting
for Stock Based Compensation – Transition and Disclosure
– an amendment of FASB Statement No. 123’’ which is
applicable to financial years beginning after 15 December
2002. The Statement permits two additional transition
methods for an entity voluntarily adopting fair value
based accounting for stock based compensation. It also
amends the disclosure requirements to require prominent
disclosure about the effects on reported net income
of an entity’s accounting policy decisions with respect
to stock based employee compensation. This Statement
does not have a significant impact on the consolidated
financial statements as SFAS No. 123 continues to be
satisfied for disclosure purposes only.
In April 2003 the FASB issued SFAS No 149 ‘‘Amendment
of Statement 133 on Derivative Instruments and Hedging
Activities’’. This Statement amends and clarifies financial
accounting and reporting for derivative instruments,
including certain derivative instruments embedded in
other contracts (collectively referred to as derivatives)
and for hedging activities under SFAS No. 133, ‘‘Accounting
for Derivative Instruments and Hedging Activities’’.
BT is currently evaluating the impact of this change.
In November 2002, the FASB issued FASB Interpretation
No. (FIN) 45, ‘‘Guarantor’s Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees
of Indebtedness of Others’’. FIN 45 requires that certain
guarantees must be recognised at fair value. FIN 45
also requires disclosure of detailed information about
each guarantee or group of guarantees. The disclosure
requirements are effective for financial statements
ending after 15 December 2002. The recognition and measurement
provisions of FIN 45 are applicable to guarantees issued
or modified after 31 December 2002. FIN 45 could have
an impact on the future results of BT depending on guarantees
issued; however, at this time the adoption of this statement
did not have a material impact on BT’s consolidated
financial statements.
In January 2003, the FASB issued FIN 46, ‘‘Consolidation
of Variable Interest Entities – an Interpretation of
Accounting Research Bulletin (ARB) No. 51’’. FIN 46
requires the primary beneficiary to consolidate a variable
interest entity (VIE) if it has a variable interest
that will absorb a majority of the entity’s expected
losses if they occur, receive a majority of the entity’s
expected residual returns if they occur, or both. FIN
46 applies immediately to VIEs created after 31 January
2003, and to VIEs in which the entity obtains an interest
after that date. This statement is not expected to have
a material impact on BT’s consolidated financial statements.
In November 2002, the Emerging Issues Task Force (EITF)
reached a consensus on EITF 00-21, ‘‘Revenue Arrangements
with Multiple Deliverables’’. The consensus addresses
how to account for arrangements that may involve multiple
revenue-generating activities, for example, the delivery
or performance of multiple products, services, and/or
rights to use assets. In applying this guidance, separate
contracts with the same party, entered into at or near
the same time, will be presumed to be a package, and
the consideration will be measured and allocated to
the separate units based on their relative fair values.
This consensus guidance will be applicable to agreements
entered into after 15 June 2003. BT is currently evaluating
the impact of this new pronouncement.
In January 2003, the EITF reached a consensus on EITF
02-18, ‘‘Accounting for Subsequent Investments in an
Investee after Suspension of Equity Method Loss Recognition’’.
This consensus states that if the additional investment,
in whole or in part, represents the funding of prior
losses, the investor should recognise previously suspended
losses. When appropriate to recognise prior losses,
the amount recognised would be limited to the amount
of the additional investment determined to represent
the funding of prior losses. The consensus is effective
for additional investments made after 5 February 2003.
This consensus is not expected to have a material impact
on BT’s consolidated financial statements.
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