Kohl's 2008 Annual Report Download - page 52

KOHL’S CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
1. Business and Summary of Accounting Policies (continued)
Stock Options
Stock-based compensation transactions, including stock options and nonvested stock awards, are accounted
for in accordance with the provisions of Statement of Financial Accounting Standards No. 123(R), “Share-based
Payment” (“SFAS 123(R)”). Under SFAS 123(R), we recognize expense related to the fair value of new,
modified and unvested share-based awards which are expected to vest on a straight-line basis over the vesting
period. The fair value of all share-based awards is estimated on the date of grant.
New Accounting Pronouncements
In January 2009, the FASB issued FASB Staff Position (“FSP”) EITF 99-20-1, “Amendments to the
Impairment Guidance of EITF Issue No. 99-20.” This standard prescribes that if the fair value of an
available-for-sale or held-to-maturity debt security is less than its cost basis at the measurement date, GAAP
requires that the reporting entity assess the impaired security to determine whether the impairment is other than
temporary. The adoption of this statement in the fourth quarter of 2008 had no impact on our consolidated
financial statements.
In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting
Principles.” This statement identifies the sources of accounting principles and the framework for selecting the
principles used in the preparation of financial statements of nongovernmental entities that are presented in
conformity with GAAP. We adopted this statement in the fourth quarter of 2008 without a material impact on our
consolidated financial statements.
In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS No. 157”). SFAS
No. 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair
value measurements. A portion of this statement was effective for 2008, while the remaining portion of the
statement is effective for our fiscal 2009. In February 2008, the FASB issued FSP FAS 157-1, “Application of
FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair
Value Measurements for Purposes of Lease Classification or Measurement under Statement 13” and also issued
FSP FAS 157-2, “Effective Date of FASB Statement No. 157,” which collectively remove certain leasing
transactions from the scope of SFAS No. 157 and partially delay the effective date of SFAS No. 157 for one year
for certain non-financial assets and liabilities. In October 2008, the FASB also issued FSP FAS 157-3,
“Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active,” which clarifies
the application of SFAS No. 157 in an inactive market and illustrates how an entity would determine fair value
when the market for a financial asset is not active. Although we will continue to evaluate the application of SFAS
No. 157, we do not currently believe adoption of the remaining portions of SFAS No. 157 will have a material
impact on our consolidated financial statements.
In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and
Financial Liabilities—Including an amendment of FASB Statement No. 115,” (“SFAS No. 159”). This standard
permits entities to measure many financial instruments and certain other items at fair value. The objective is to
improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings
caused by measuring related assets and liabilities differently without having to apply complex hedge accounting
provisions. A portion of this statement was effective for 2008, while the remaining portion of the statement is
effective for our fiscal 2009. We do not expect the adoption of the remaining portions of this statement will have
a material impact on our consolidated financial statements.
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