This excerpt taken from the MRO 10-K filed Mar 10, 2005.
Reclassifications Certain reclassifications of prior years' data have been made to conform to 2004 classifications.
2. New Accounting Standards
Effective July 1, 2004, Marathon adopted FASB Staff Position FAS 106-2 ("FSP FAS 106-2") "Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003" ("the Act"). FSP FAS 106-2 includes guidance on recognizing the effects of the new legislation under the various conditions surrounding the assessment of "actuarial equivalence." Marathon has determined, based on available regulatory guidance, that the postretirement plans' prescription drug benefits are actuarially equivalent to the Medicare "Part D" benefit under the Act. The subsidy-related reduction at July 1, 2004 in the accumulated postretirement benefit obligation for the Marathon and MAP postretirement plans are $44 million and $49 million. The combined favorable pretax effect of the subsidy-related reduction for 2004 on the measurement of the net periodic postretirement benefit cost related to service cost, interest cost and actuarial gain amortization, is $7 million.
Effective July 1, 2004, Marathon adopted FASB Staff Position FAS 142-2, "Application of FASB Statement No. 142, Goodwill and Other Intangible Assets, to Oil- and Gas-Producing Entities" ("FSP FAS 142-2"). FSP FAS 142-2 states drilling and mineral rights of oil- and gas-producing entities are excluded from Statement of Financial Accounting Standard No. 142 "Goodwill and Other Intangible Assets" ("SFAS No. 142"), and accordingly, should not be classified as intangible assets rather than oil and gas properties. The adoption of FSP FAS 142-2 did not have an effect on Marathon's financial position, cash flows or results of operations.
Effective December 21, 2004, Marathon adopted FASB Staff Position FAS 109-1, "Application of FASB Statement No. 109, Accounting for Income Taxes, to the Tax Deduction on Qualified Production Activities Provided by the American Jobs Creation Act of 2004" ("FSP FAS 109-1"). FSP FAS 109-1 states the deduction, signed into law by the President on October 22, 2004, of up to 9 percent (when fully phased-in) of the lesser of (a) "qualified production activities income," as defined in the Act, or (b) taxable income (after the deduction for the utilization of any net operating loss carryforwards) should be accounted for as a special deduction in accordance with Statement 109. Accordingly, Marathon will treat the deduction as a permanent difference in the years taken.