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86
RECENTLY ADOPTED ACCOUNTING
STANDARDS
■ ACCOUNTING BY INSURANCE ENTERPRISES FOR
DEFERRED ACQUISITION COSTS IN CONNECTION WITH
MODIFICATIONS OR EXCHANGES OF INSURANCE
CONTRACTS
In September 2005, the Accounting Standards Executive
Committee of the American Institute of Certified Public
Accountants issued the Statement of Position (“SOP”) 05-1,
“Accounting by Insurance Enterprises for Deferred Acquisition
Costs in Connection with Modifications or Exchanges of
Insurance Contracts.” SOP 05-1 provides guidance on
accounting for deferred acquisition costs on internal replace-
ments of insurance and investment contracts other than
those specifically described in FAS No. 97, “Accounting and
Reporting by Insurance Enterprises for Certain Long-Duration
Contracts and for Realized Gains and Losses from the Sales
of Investments.” Sony adopted SOP 05-1 on April 1, 2007.
The adoption of SOP 05-1 did not have a material impact on
Sony’s results of operations and financial position.
■ ACCOUNTING FOR SERVICING OF FINANCIAL ASSETS
In March 2006, the Financial Accounting Standards Board
(“FASB”) issued FAS No. 156, “Accounting for Servicing of
Financial Assets—an amendment of FASB Statement No. 140.”
This statement amends FAS No. 140, “Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of
Liabilities” with respect to the accounting for separately recog-
nized servicing assets and servicing liabilities. Sony adopted
FAS No. 156 on April 1, 2007. The adoption of FAS No. 156 did
not have a material impact on Sony’s results of operations and
financial position.
■ ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES
In June 2006, the FASB issued FASB Interpretation (“FIN”)
No. 48, “Accounting for Uncertainty in Income Taxes, an
interpretation of FASB Statement No. 109.” FIN No. 48
clarifies the accounting for uncertainty in income taxes
recognized in an enterprise’s financial statements in accor-
dance with FAS No. 109, “Accounting for Income Taxes.”
FIN No. 48 prescribes a minimum recognition threshold and
measurement attribute for the financial statement recogni-
tion and measurement of a tax position taken or expected
to be taken in a tax return. FIN No. 48 also provides
guidance on derecognition, classification, interest and
penalties, accounting in interim periods, disclosure, and
transition. Effective April 1, 2007, Sony adopted the
provision of FIN No. 48. As a result of the adoption, a
charge against beginning retained earnings totaling 4,452
million yen was recorded. As of April 1, 2007, the total
unrecognized tax benefits were 223,857 million yen, of
which 129,632 million yen, if recognized, would affect
Sony’s effective tax rate.
■ HOW TAXES COLLECTED FROM CUSTOMERS AND
REMITTED TO GOVERNMENTAL AUTHORITIES SHOULD
BE PRESENTED IN THE INCOME STATEMENT
In June 2006, the Emerging Issues Task Force (“EITF”) issued
EITF Issue No. 06-3, “How Taxes Collected from Customers and
Remitted to Governmental Authorities Should be Presented in
the Income Statement.” EITF Issue No. 06-3 requires disclosure
of the accounting policy for any tax assessed by a governmental
authority that is imposed concurrently on a specific revenue-
producing transaction between a seller and a customer. Sony
adopted EITF Issue No. 06-3 on April 1, 2007. The adoption of
EITF Issue No. 06-3 did not have a material impact on Sony’s
results of operations.
RECENT PRONOUNCEMENTS
■ FAIR VALUE MEASUREMENTS
In September 2006, the FASB issued FAS No. 157, “Fair
Value Measurements.” FAS No. 157 establishes a framework
for measuring fair value, clarifies the definition of fair value,
and expands disclosures about the use of fair value mea-
surements. FAS No. 157 applies under other accounting
pronouncements that require or permit fair value measure-
ments and does not require any new fair value measure-
ments. FAS No. 157 will be effective for Sony beginning
April 1, 2008. In February 2008, the FASB issued FASB Staff
Positions (“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 FSP FAS 157-2,
“Effective Date of FASB Statement No.157.” FSP FAS 157-1
removes certain leasing transactions from the scope of FAS
No. 157. FSP FAS 157-2 partially delays the effective date
of FAS No. 157 for one year for certain nonfinancial assets
and liabilities. The adoption of FAS No. 157 as it relates to
financial assets and liabilities is not expected to have a
material impact on Sony’s consolidated results of operations
and financial position. Sony is currently evaluating the
impact for nonfinancial assets and liabilities.