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DOCUMENTATION LEAD SHEET

Document Type Accounting Policy Statement
Document Title Accounting for Fixed Assets & Leasehold
Improvements
Issuance Date July 2, 2007
Revised Date cto!er ", 200#
Policy Number A$%0
Policy Owner &orporate Accounting 'olicy (roup
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)a!le of &ontents
&ontents
*ection " + *cope and Introduction
*ection 2 + Accounting (uidance
*ection , + 'resentation & -isclosures
*ection . + -efinitions
*ection % + /elated (uindance
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Corporate Accounting Policies Manual
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Assets
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Accounting $or Fi%e& Assets ' (ease)ol& *mpro+ements
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1. Scope and Intoduction
"0"0 )he purpose of this Accounting 'olicy is to provide the information re1uired to support the
accounting for fixed assets, including leasehold improvements, according to the appropriate
guidance under (enerally Accepted Accounting 'rinciples 2(AA'30
"020 )he policy identifies the categories of fixed assets, their useful lives, impairment re1uirements,
and depreciation and amorti4ation methodologies0
"0,0 )his policy does not include the accounting for capitali4ed soft5are cost, leases of !uildings and
e1uipment, or good5ill and intangi!le assets0 /efer to &orporate Accounting 'olicy 2&A'3 A$60,
Accounting for Software Costs, &A' L$.0, Accounting for eases! essee Perspective" and &A'
A$70, Accounting for #oodwill and Intangible Assets, respectively, for further guidance0
"0.0 Fixed assets are physical assets that are used in the operations of the &ompany and are not
intended for sale0
"0%0 Fixed assets include8
"0%0"0 Land and land improvements
"0%020 5ned 9uildings and improvements
"0%0,0 Leasehold Improvements
"0%0.0 Furniture and furnishings
"0%0%0 &omputer and data processing e1uipment
"0%070 :oice;)elecom <1uipment
"0%070 *ignage
"0%060 Automo!iles
"0%0#0 ffice e1uipment
"0%0"00 Aircraft
"0%0""0 Fine art
"070 /efer to &orporate 'olicy -irectory 2&'-3 I$F$200, $a%or &'penditure Committee and
Aut(ori)ation for &'penditure Process" for the corporate ma=or expenditures policy0
"070 /efer to &'- I$F$2"0, Pro%ect Costing" for the corporate pro=ect costing policy0
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Accounting $or Fi%e& Assets ' (ease)ol& *mpro+ements
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"060 Leasehold improvements are alterations, additions, or improvements made to facilities that are
recorded as assets0
"0#0 Leasehold improvements may !e funded !y the tenant;lessee or !y the landlord;lessor through
incentives or allo5ances under terms in the lease0
"0"00 Leasehold improvements may also !e ac1uired in !usiness com!ination transactions through the
assumption of perating Leases
1
0
"0""0 Although the lessee en=oys the !enefits of leasehold improvements during the term of the lease,
they revert to the landlord upon expiration of the lease0
"0"20 If fixed assets are to !e disposed of as part of a planned disposal or <xit Activity, refer to &A' L$
%0, Accruals for Displacements and Disposed *usiness0
!. Accounting "uidance
20"0 Capitali#ation T$e%$old%
20"0"0 )he &ompany>s capitali4ation policy is to capitali4e any individual item 5ith an ac1uisition
cost of at least ?%,000 and a useful life of one year or greater0
20"020 Foreign su!s should utili4e the foreign currency e1uivalent of ?%,000 for their capitali4ation
threshold, 5hich may !e esta!lished at the !eginning of each fiscal year0
20"0,0 Assets 5ith costs !elo5 the ?%,000 @*- or foreign e1uivalent threshold
!
or a useful life of
less than one year must !e expensed0
20"0.0 If a &ompany su!sidiary 5ishes to utili4e a different threshold than those stated a!ove, the
su!sidiary controller must first o!tain approval from the &orporate &ontroller0
20"0%0 In determining 5hether a fixed asset meets the &ompany>s materiality threshold, the cost of
the asset includes all necessary costs to !ring the asset to an operating state, as further
discussed in the Recognition and $easurement section !elo50
20"070 In addition, any asset that is part of a Aa=or <xpenditure /e1uest 2A</3 5ill !e capitali4ed
as part of the overall pro=ect provided that the individual asset>s cost exceeds of ?%00 2e0g0,
an asset may have multiple components such as chairs and cu!icles 5ith values less than
?%00, 5hich are a part of a larger assetBfurniture inventory30
1
Terms defined in Section IV, Definitions, are underlined the first time they appear.
2
FASB ASC !" # 2$ # 1" # %& Interest Capitalization of Interest Scope and Scope Exceptions 'superseded para(raph 1$ of
FASB Statement )o. %2, Determining Materiality for Capitalization of Interest Cost*, references the applica+ility of certain
materiality thresholds statin( that such thresholds ,are -ustified on the (rounds that the assets .hose costs are char(ed to e/pense
as purchased are immaterial +oth indi0idually and in the a((re(ate.1
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20"070 9ulC purchases of personal computers and printers and related e1uipment should !e
capitali4ed if, in aggregate, the !ulC purchase is e1ual to or exceeds the ?%,000 threshold,
even though individually the items are less than ?%,0000 )he &orporate )echnology
*ervices (roup coordinates such purchases0
20"060 )he minimum thresholds discussed a!ove also apply to the initial valuation 2pursuant to
FA*9 A*& 60%8 *usiness Combinations, 5hich superseded FA* "."3 of fixed assets
ac1uired in a purchase !usiness com!ination0 An exception to the application of these
thresholds could !e appropriate in a purchase !usiness com!ination, if it is determined to
not !e expedient or cost effective to apply such thresholds to the ac1uiree>s existing fixed
assets0
20"0#0 A !ooC &arrying :alue 5ill not !e assigned to any fixed asset for 5hich the estimated fair
value, on the date of the !usiness com!ination, is less than the &ompany>s capitali4ation
threshold0
20"0"00 'roperty, plant and e1uipment must not !e 5ritten up to reflect appraisal, marCet, or
current values, 5hich are a!ove cost0
2020 &ecognition and Mea%uement
2020"0 Fixed assets must !e capitali4ed and recorded 5hen the asset is o!tained and first put into
service0
202020 )he amounts that can !e capitali4ed include the asset>s purchase price plus all costs
necessary to !ring the asset to an operating state0 )hese costs generally include the
follo5ing8
202020"0 Land
202020"0"0 &ontract price
202020"020 9roCerage fees and commissions
202020"0,0 Legal fees and title search fees
202020"0.0 /ecording fees
202020"0%0 )axes in arrears, paid !y the &ompany
202020"070 /eal estate transfer taxes
202020"070 &ost of title guarantee policy
202020"060 *urvey costs
202020"0#0 *pecial assessments for certain local area improvements, such as streets,
lighting and se5age systems
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202020"0"00 @nexpired lease cancellation costs
202020"0""0 ption costs if exercised
202020"0"20 &ost of land and !uilding if the &ompany ac1uires the property 5ith the intent to
demolish the !uilding
202020"0",0 -emolition and removal costs 2minus salvage recovered3 for property ac1uired
5ith the intent of demolishing the !uilding0 2For tax purposes, demolition and
removal costs are al5ays capitali4ed regardless of intent3
20202020 Land Improvements
20202020"0 <xcavation, grading or filling of land for a specific !uilding
2020202020 Landscaping of land 5ith other than annual plants
20202020,0 'ermanent improvements such as private parCing lots and drive5ays
20202020.0 -rainage systems re1uired for !uildings to !e !uilt
20202020%0 *horing and filling of mines necessary for !uilding construction
202020,0 9uildings
202020,0"0 &ontract price or construction cost
202020,020 /emodeling and retrofitting re1uired to put the !uilding in servicea!le condition
202020,0,0 &ost of plans, specifications, and !lueprints
202020,0.0 9uilding permits
202020,0%0 )axes in arrears on !uildings, paid !y the &ompany
202020,070 &onstruction period interest 2see !elo5 for additional information3 and certain
taxes for financial reporting purposes3
202020,070 Aaterial architect and engineering fees for design and supervision of
construction
202020,060 &ost of temporary !uildings used !y the staff during construction
202020,0#0 -emolition costs related to existing !uildings to maCe 5ay for ne5 construction
202020,0"00 &onsulting fees on ma=or pro=ects
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202020.0 &omputer <1uipment, ffice <1uipment, :ehicles and Furniture
202020.0"0 riginal contract price after discounts and prior to )rade$In allo5ances, freight,
delivery, import duties, handling and storage costs
202020.020 In$transit insurance charges
202020.0,0 Installation charges paid to outside parties
202020.0.0 )esting and preparation charges
202020.0%0 /econditioning cost for used assets
202020.070 *ales tax 2net of re!ate, if pro!a!le of receiving3
2020,0 <xclude the follo5ing costs from capitali4ation8
2020,0"0 Ainor repairs and replacements of component parts 5here the expected useful life is
not su!stantially increased
2020,020 /econstruction or alteration of e1uipment except as noted a!ove
2020,0,0 /earrangement, relocation and reinstallation costs
2020,0.0 &ost of easements and rights of 5ay 5ith limited life
2020,0%0 <lectrical renovation 5orC not done under an A</ 2generally it is appropriate to
capitali4e electrical renovation 5orC 5hen completed under an A</3
2020.0 &apitali4e interest costs during construction pro=ects as follo5s8
2020.0"0 &apitali4e interest costs at least 1uarterly if the total pro=ect>s accumulated interest
costs are expected to !e greater than ?%00,0000
2020.020 &apitali4e interest only during the period of construction0 -o not capitali4e interest
during any period in 5hich the asset is held 5ithout any activity !eing performed to
ready the asset for its intended use0 Do5ever, it is appropriate to capitali4e interest
during periods of inactivity resulting from delays that are externally imposed or that
are inherent in the asset ac1uisition process0
2020.0,0 @se the rate of the specific !orro5ing that is in place to support the construction
pro=ect0 If this does not apply, use the &ost of &arry /ate0
2020.0.0 Apply the applica!le rate to the average expenditures to calculate interest expense to
!e capitali4ed for the period0 For purposes of this policy, expenditures to 5hich
capitali4ation rates are to !e applied are capitali4ed expenditures 2net of retainages3
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for the 1ualifying asset, including capitali4ed interest from previous periods, that have
re1uired8
2020.0.0"0 )he payment of cash,
2020.0.020 )he transfer of other assets, or
2020.0.0,0 )he incurring of a lia!ility on 5hich interest is recogni4ed 2in contrast to lia!ilities,
such as trade paya!les, accruals, and retainages on 5hich interest is not
recogni4ed30
20,0 Depeciation and Amoti#ation
20,0"0 Fixed asset depreciation must !e calculated and recorded over the <stimated @seful Lives
'
of the assets0 -epreciation expense reflects a deprecia!le asset>s 5ear and deterioration
over a period, and must start at the !eginning of an asset>s useful life0
20,020 )he goal of a depreciation method is to provide for a reasona!le, consistent matching of
revenue and expense !y allocating the cost of the deprecia!le asset systematically over its
estimated useful life0
20,0,0 )he &ompany depreciates its fixed assets on a *traight$Line -epreciation !asis starting
5hen the asset is first put into service0
20,0.0 )he annual depreciation rate is calculated as cost less *alvage :alue, if any, divided !y the
estimated useful life in years E-epr0 <xp0 F 2&ost + *alvage :alue3 ; @seful LifeG0
20,0.0"0 NOTE( All assets are assumed to have a salvage value of 4ero except for aircraft0
20,0%0 &apitali4ed leasehold improvements must !e amorti4ed over the shorter of the8
20,0%0"0 @seful life of the leasehold improvement 2generally, ten years or less30
20,0%020 /emaining term of the lease, including rene5al option periods only if exercise of
those options is reasona!ly assured considering !argain rene5al options or penalties
in the lease or other factors as defined in FA*9 A*& 6.08 eases 2superseded FA*
",30
20,070 )he asset>s amorti4ation period !egins at the earlier of 5hen the &orporation taCes
possession or is given control over the leased property !y the landlord0 )his period may
include periods prior to the time the &orporation commences operations or maCes rental
!
In accordance .ith FASB ASC !2$ # 1$ # !" # %& Property, Plant and Equipment Oerall Su!sequent Measurement
Depreciation 'superseded Accountin( 3esearch Bulletin %!*, the estimated useful life of a deprecia+le asset is the period o0er
.hich ser0ices are e/pected to +e rendered +y the asset. FASB ASC !2$ # 1$ # !" # % states in part&
"enerally accepted accounting principles require t#at t#is cost !e spread oer t#e expected useful life of t#e facility in suc#
a $ay as to allocate it as equita!ly as possi!le to t#e periods during $#ic# serices are o!tained from t#e use of t#e facility%
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payments under the terms of the lease0 -uring this period, the &orporation has the right to
use the leased property and does so for the purpose of constructing the leasehold
improvements0
20,070 )he amorti4ation period used for leasehold improvements ac1uired in a !usiness
com!ination or placed in service significantly after and not contemplated at or near the
!eginning of the lease term 2collectively referred to as su!se1uently ac1uired leasehold
improvements3 is the shorter of8
20,070"0 )he remaining useful life of the leasehold improvement0
20,07020 A term that includes re1uired lease periods and rene5als that are deemed to !e
reasona!ly assured upon the ac1uisition0 2)he rene5al !eing considered must !e a
rene5al right provided for in the lease agreement03
20,060 Follo5ing are the useful lives the &ompany uses8
Fixed Asset &ategory *tandard <stimated @seful Life
Land Hon$depreciating asset
Leasehold Improvements Lesser of the estimated useful life of the asset
2generally "0 years unless esta!lished other5ise3 and
the remaining term of the lease, including rene5al
options in the lease that are reasona!ly assured of
exercise0
9uildings .0 years
9uilding Improvements "0 years
Furniture and Fixtures "0 years
*oft5are Lesser of the estimated useful life or % years
&omputer <1uipment 2except voice3 . years
)elecommunications 2voice e1uip03 6 years
<1uipment 2food service, office, copier e1uip03 % years
Automo!iles % years
-elivery :ehicles Lesser of the estimated useful life or % years
Fine Art Hon$depreciating asset
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Automated )eller Aachines 2A)As3 7 years
&ondominiums 20 years
:ault <1uipment 20 years
*ecurity <1uipment "0 years
Aircraft "% years
*ignage "0 years
20.0 Capital Po)ect% in Poce%%
20.0"0 A capital pro=ect represents a series of expenditures made over a period of time and related
to a specific premises pro=ect 2e0g0, alterations or improvements to o5ned or leased
premises, !uilding construction, etc030
20.020 <xpenditures associated 5ith such assets are initially recorded in &apital 'ro=ects in
'rocess0 nce the capital pro=ect is placed in service or, if not determina!le, once the
pro=ect is su!stantially complete 2i0e0, #0I complete3, the costs are transferred from &apital
'ro=ects in 'rocess to the appropriate fixed asset category and the depreciation of the
asset !egins0
20.0,0 For further guidance on &apital 'ro=ects in 'rocess, refer to &'- I$F$2"0, Pro%ect Costing0
20%0 Di%po%ition o* +i,ed A%%et%
20%0"0 Discontinued Operations
20%0"0"0 )reatment of assets in use or disposed of during an event of discontinued operations
are covered in &A' L$%0, Accruals for Displacements and Disposed *usiness0
20%020 Sales of +i'ed Assets
20%020"0 Fixed assets that are to !e disposed of, via sale, are not re1uired to !e accounted for
using the policy !elo5 if the sale value of the asset is not expected to exceed ?"0
million or the sale is expected to occur 5ithin the fiscal 1uarter0
20%02020 Fixed assets to !e sold that meet this threshold are to !e classified as Deld for *ale
on the !alance sheet and measured at the lo5er of their carrying amount or fair value
less any cost2s3 to sell0
20%020,0 Assets are considered to !e classified as Deld for *ale 5hen all of the follo5ing
criteria are met8
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20%020,0"0 Aanagement, having the authority to approve the action, commits to a plan to
sell the asset2s30
20%020,020 )he asset2s3 is availa!le for immediate sale in its present condition su!=ect only
to terms that are usual and customary for sales of such assets0
20%020,0,0 An active program to locate a !uyer and other actions re1uired to complete the
plan to sell the asset2s3 have !een initiated0
20%020,0.0 )he sale of the asset2s3 is pro!a!le 5ithin one year, unless one of the follo5ing
permitted exceptions are met8
20%020,0.0"0 If the &ompany expects another third party 2not a !uyer3 to impose
conditions on the asset transfer that 5ill cause the period to complete the
sale to !e extended !eyond one year, and the actions necessary to
respond to the imposed conditions cannot !e initiated until a firm
purchase commitment is o!tained and that firm purchase commitment is
pro!a!le 5ithin one year0
20%020,0.020 If the &ompany o!tains a firm purchase commitment and, as a result, a
!uyer or other third party 2not a !uyer3 imposes conditions on the transfer
that 5ill extend the period re1uired to complete the sale !eyond one year
and the actions necessary to respond to the imposed conditions have
!een or 5ill !e timely initiated and a favora!le resolution of the delaying
factors is expected0
20%020,0.0,0 If during the initial one year period, circumstances arise that 5ere
previously considered unliCely and the transaction is not completed 5ithin
one year and during the one year period the &ompany initiated the
actions necessary to respond to the change in circumstances and the
transaction is !eing actively marCeted at a price that is reasona!le in light
of the changed circumstances and all other criteria are met0
20%020,0%0 )he asset2s3 is !eing actively marCeted for sale at a price that is reasona!le in
relation to its current fair value0
20%020,070 Actions re1uired to complete the plan indicate that it is unliCely that significant
changes to the plan 5ill !e made or that the plan 5ill !e 5ithdra5n0
20%020.0 -epreciation of a fixed asset must !e discontinued 5hen the asset is classified as
Deld for *ale and no longer in use0
20%020%0 (ains;losses and expenses must !e recorded 5hen fixed assets are disposed0 )he
net gain or loss on the sale 2of a fixed asset3 must !e calculated !y comparing the
proceeds received, net of costs to sell, unless an impairment had previously !een
recorded, 5hich included the estimated costs to sell as a reduction of carrying value,
5ith the asset>s carrying value0
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20%0,0 Traded Assets
20%0,0"0 For trade$ins, the ac1uired asset must !e recorded at the !asis of the traded asset
ad=usted for any consideration given or received, and no gain or loss should !e
recogni4ed0
20%0.0 Donated Assets
20%0.0"0 -onations of fixed assets must !e recorded as follo5s8
20%0.0"0"0 For financial accounting, record the 9ooC 9asis of the asset at the previous
month$end as donation expense0
20%0.0"020 For tax accounting, consult the &orporate )ax (roup, 5hich 5ill determine the
tax treatment0 )he donation value is generally e1ual to the asset>s fair value0
20%0%0 Abandoned Assets
20%0%0"0 An a!andonment expense must !e recorded for the !ooC !asis of any a!andoned
asset as of the previous month$end0
20%070 ost or Destroyed Assets
20%070"0 A casualty loss expense must !e recorded for the !ooC !asis of any asset lost or
destroyed net of any proceeds for salvage or insurance recovery, if pro!a!le0
20%070 NOTE( Any disposal of an asset 5ith a net !ooC value of e1ual to or greater than ?"00,000
must !e authori4ed !y the -irector of the Finance (roup0
2070 Impaiment o* Long-Li.ed A%%et%
2070"0 Long$lived assets to !e held and used !y the &ompany include !uildings and e1uipment,
leasehold improvements, capital leases 2&ompany as lessee3, long$lived assets of the
&ompany su!=ect to an operating lease, amorti4ing intangi!le assets, the excess of
carrying value of an e1uity investment over the &ompany>s share of the net !ooC value of
the e1uity investment 2inherent good5ill3, and long$term prepaid assets0 )hese assets
must !e revie5ed annually for potential impairment losses0
2070"0"0 NOTE( Any asset impairment of e1ual to or greater than ?"00,000 must !e authori4ed
!y the Impairment /evie5 &ommittee and the -irector of the Finance (roup0
207020 For guidance on soft5are impairment testing, refer to &A' A$60, Accounting for Software
Costs0
2070,0 &onsider events or changes in circumstances that 5ould indicate the carrying amount of a
long lived asset is impaired0 <xamples include8
2070,0"0 A significant decrease in the marCet value of a long$lived asset0
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2070,020 A significant change in the extent or manner in 5hich an asset is used or a significant
physical change in the asset0
2070,0,0 A significant adverse change in legal factors or in the !usiness climate that could
affect the value of an asset or an adverse action or assessment !y a regulator0
2070,0.0 An accumulation of costs significantly in excess of the amount originally expected to
ac1uire or construct an asset0
2070,0%0 A current period operating or cash flo5 loss com!ined 5ith a history of operating or
cash flo5 losses or a pro=ection or forecast that demonstrates continuing losses
associated 5ith an asset used for the purpose of producing revenue0
2070,070 A current expectation that, more liCely than not, a long$lived asset 2asset group3 5ill
!e sold or other5ise disposed of significantly !efore the end of its previously
estimated useful life0
2070.0 An impairment loss must !e recorded 5hen the carrying amount of the long$lived asset is not
recovera!le and exceeds its fair value0
2070%0 )he carrying amount of the long$lived asset is not recovera!le if it exceeds the sum of the
undiscounted, pre$tax cash flo5s expected to result from its use and eventual disposition0
207070 If the carrying value is determined to not !e recovera!le, the fair value of the long$lived asset
must !e calculated 2unless the fair value is readily availa!le from pu!lished marCet sources or
!roCers3 !y adding the H': of the estimated, pre$tax cash flo5s 25ithout interest charges3
expected to result from the use and disposition of the asset0
207070 An impairment loss must !e calculated as the excess of the long$lived asset>s carrying
amount over its fair value0
207060 )he carrying amount of the asset must !e reduced to its fair value 5ith an offsetting entry to
expense0 )he asset>s ne5 carrying value must !e depreciated;amorti4ed over its remaining
useful life0
2070#0 In order to measure an impairment loss, a long$lived asset must !e grouped 5ith other
assets and lia!ilities at the lo5est level for 5hich identifia!le cash flo5s are independent of
the cash flo5s of the &ompany>s other assets and lia!ilities0
2070"00 Do5ever, any impairment loss must reduce only the carrying value of the long$lived asset0
)he other assets in the group must !e evaluated and valued in accordance 5ith other
applica!le generally accepted accounting principles0
2070""0 )he future cash flo5s used to estimate the recovera!ility of a long$lived asset must
include only the estimated cash flo5s during the estimated remaining useful life of the
asset, including the cash flo5s associated 5ith the future expenditures re1uired to
maintain the estimated remaining useful life of the asset group0
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2070"20 )he estimated remaining useful life of the asset group must !e !ased on the estimated
useful life of the 'rimary Asset0
2070",0 If the primary asset is not the asset 5ith the longest estimated remaining useful life,
estimates of future cash flo5s for the asset group should assume the sale of the group at
the end of the estimated useful life of the primary asset0
2070",0"0 NOTE( )he estimated useful life of the asset is the !est estimate of its service
potential to the &ompany0 )he estimate useful life is not limited to the remaining
!ooC amorti4ation period of the asset0
2070 Capital Lea%e%
2070"0 Leases are agreements conveying the right to use assets for a stated period of time and
are classified as either capital;finance leases or operating leases, !ased on specific
conditions0
207020 *ee &A' L$.0, Accounting for eases! essee Perspective, for further guidance on lease
classification re1uirements0
2070,0 )he capital lease asset must !e depreciated on a straight$line !asis using the same useful
lives as purchased fixed assets0
'. Pe%entation / Di%clo%ue%
,0"0 Pe%entation
,0"0"0 Fixed assets must !e reported as 'remises and e1uipment0
,0"020 Fine 5orCs of art must !e reported as ther assets0
,0"0,0 -epreciation expense must !e recorded as follo5s8
,0"0,0"0 9uilding and improvements depreciation as Het occupancy expense
,0"0,020 Hon$!uilding depreciation as Furniture and e1uipment expense
,0"0.0 (ains and losses incurred on the disposal of premises must !e recorded as Het occupancy
expense0
,0"0%0 (ains and losses incurred on the disposal of all other fixed assets must !e recorded as
Furniture and e1uipment expense0
,0"070 -onation expense must !e recorded as other noninterest expense0
,0"070 A!andonment and casualty losses must !e recorded as either Furniture and e1uipment or
Het occupancy expense0
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Assets
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,020 Di%clo%ue%
,020"0 )he follo5ing disclosures should !e made in the financial statements or in the notes, if
significant8
,020"0"0 -epreciation expense for the period,
,020"020 9alances of ma=or classes of deprecia!le assets, !y nature or function, at the
!alance$sheet date,
,020"0,0 Accumulated depreciation, either !y ma=or classes of deprecia!le assets or in total, at
the !alance sheet date, and
,020"0.0 A general description of the method or methods used in computing depreciation 5ith
respect to ma=or classes of deprecia!le assets0
,0,0 Impaiment o Di%po%al o* Long-Li.ed A%%et%
,0,0"0 Impairment losses must !e recorded as Honinterest expense0
,0,020 If an impairment occurs, disclose the follo5ing information in the notes to the financial
statements for the period in 5hich the impairment loss is recogni4ed8
,0,020"0 Assets impaired and the facts and circumstances leading to the impairment0
,0,02020 )he amount of the loss and ho5 fair value 5as determined0
,0,020,0 )he caption in the income statement or the statement of activities in 5hich the loss is
aggregated unless that loss has !een presented as a separate caption or reported
parenthetically on the face of the statement0
,0,020.0 If applica!le, the !usiness segment affected0
,0.0 ease(old Improvements
,0.0"0 -isclose in footnotes the follo5ing8
,0.0"0"0 Aaterial lease agreements and arrangements0
,0.0"020 )he essential provisions of material leases, including the original term2s3, rene5al
periods, reasona!ly assured rent escalations, rent holidays, contingent rent, rent
concessions, leasehold improvement incentives, and unusual provisions and
conditions0
,0.0"0,0 )he accounting policies for leasehold improvements and leases, including treatment
of each of the a!ove components of lease agreements if significant0
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Assets
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,0.0"0.0 )he !asis on 5hich contingent rentals are determined0
,0.0"0%0 )he amorti4ation period of material leasehold improvements0
,0.0"070 )he original cost of leasehold improvements0
0. De*inition%
.0"0 ASSET "&OUP - A group of assets and related lia!ilities at the lo5est level of the &ompany for
5hich identifia!le cash flo5s are largely independent of the cash flo5s of other groups of assets
and lia!ilities0
.020 1OO2 1ASIS3CA&&4IN" 5ALUE - )he ac1uisition cost of an asset less depreciation and is used in
computing gain or loss on disposition or retirement0
.0,0 CAPITAL E6PENDITU&E - An expenditure 2outlay3 to ac1uire property or e1uipment having a useful
life greater than one year that 5ill !e !ooCed as a fixed asset0
.0.0 CAPITAL LEASE - )ransfers to the &ompany su!stantially all the !enefits and risCs inherent in the
o5nership of the leased property0
.0%0 COST O+ CA&&4 &ATE - )he &ompany>s 5eighted average rate of total purchased funds, !oth term
and overnight0 'urchased funds used for ar!itrage are excluded from the calculation0 )he cost of
carry rate can !e o!tained !y contacting the Asset;Lia!ility Aanagement )ransfer 'ricing -ivision
of the &orporate )reasury (roup0
.070 ESTIMATED USE+UL LI+E - )he period of expected usefulness of an asset, 5hich may or may not
coincide 5ith deprecia!le life for income tax purposes0
.070 E6IT ACTI5IT4 7 (enerally refers to 5inding do5n or a!andoning a !usiness line, process, product
or office2s3, !ut 5hich is smaller than a !usiness segment0
.060 OPE&ATIN" LEASE - Is a transaction 5hich does not transfer su!stantially all of the !enefits and
risCs inherent in the o5nership of the leased property0
.0#0 P&IMA&4 ASSET - )he principal long$lived asset !eing depreciated or intangi!le asset !eing
amorti4ed that is the most significant component asset from 5hich the asset group derives its
cash flo5 generating capacity0 )he primary asset of an asset group cannot !e land or an
intangi!le asset not !eing amorti4ed0 Factors to evaluate in determining the primary asset
include8
.0#0"0 Jhether other assets of the group 5ould have !een ac1uired 5ithout the asset0
.0#020 )he level of investment that 5ould !e re1uired to replace the asset0
.0#0,0 )he remaining useful life of the asset relative to the other assets of the group0
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Assets
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.0"00 SAL5A"E 5ALUE3&ESIDUAL 5ALUE- )he estimated, or actual, net reali4a!le value 2proceeds less
removal costs3 of an asset at any time0 *alvage value is ignored for tax purposes0
.0""0 ST&AI"HT-LINE DEP&ECIATION- Aethod of depreciation 5here!y the asset is depreciated at a
constant rate over is estimated useful life0 If the deprecia!le life is KnL periods, then the
depreciation charge is ";n of the deprecia!le cost0
.0"20 T&ADE-IN- )he exchange of an o5ned asset for an asset of the same type o5ned !y a third party0
Additional amounts are usually paid in cash to the seller0
8. &elated "uidance
%0"0 +AS1 ASC 90:8 eases 2superseded FA* ",, Accounting for easesM FA* #6, Accounting for
easesM <I)F 0%$7, Determining t(e Amorti)ation Period for ease(old ImprovementsM F*' FA*
",$", Accounting for Rental Costs Incurred During a Construction Period3
%020 +AS1 ASC 9'88 Interest 2superseded FA* ,., Capitali)ation of Interest CostM FA* .2
Determining $ateriality for Capitali)ation of Interest Cost3
%0,0 +AS1 ASC ';:8 Property" Plant" and &,uipment 2superseded FA* ".., Accounting for t(e
Impairment or Disposal of ong!ived Assets3
%0.0 +AS1 ASC 0!:8 &'it or Disposal Cost Interest 2superseded FA* ".7, Accounting for Costs
Associated wit( &'it or Disposal Activities3
%0%0 +AS1 ASC 9088 Nonmonetary Transactions 2superseded FA* "%,, &'c(ange of Nonmonetary
Assets3