This excerpt taken from the NDAQ 8-K filed Aug 1, 2008.
23. New Accounting Pronouncements
In early July 2006, the FASB issued FASB Interpretation (FIN) No. 48, Accounting for Uncertainty in Income Taxes an Interpretation of Statement No. 109. FIN 48 was issued to address financial statement recognition and measurement by an enterprise of a tax position taken, or expected to be taken, in a tax return. The new standard will require several new disclosures in annual financial statements, including (a) the income statement classification of income tax-related interest and penalties and (b) a reconciliation of the total amount of unrecognized tax benefits. On February 1, 2008, the FASB issued FASB Staff Position (FSP) FIN 48-2, Effective Date of FASB Interpretation No. 48 for Certain Nonpublic Enterprises. The FSP defers the effective date of FIN 48, Accounting for Uncertainty in Income Taxes, for certain nonpublic companies to the Exchanges annual financial statements for fiscal years beginning after December 15, 2007. Nonpublic companies subject to the deferral are not required to adopt FIN 48 in interim period financial statements in the year of adoption. Earlier adoption is permitted, but when adopted, FIN 48 must be applied as of the beginning of the Exchanges fiscal year. The Exchange is still evaluating the impact of adoption of FIN 48.
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. SFAS No. 157 clarifies the principle that fair value should be based on assumptions market participants would use when pricing an asset or liability and establishes a fair value hierarchy that prioritizes information used to develop those assumptions. Under the standard, fair value measurements would be separately disclosed by level within the fair value hierarchy. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007. The adoption of SFAS No. 157 is not expected to have a material impact on the financial position or results of operations of the Exchange.
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 expands the use of fair value accounting but does not affect existing standards, which require assets and liabilities to be carried at fair value. Under SFAS No. 159, a company many elect to use fair value to measure accounts and loans receivable, available-for-sale and held-to-maturity securities, equity method investments, accounts payable, guarantees, issued debt and other eligible financial instruments. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. The Exchange has not determined yet whether it will elect to adopt SFAS No. 159.
This excerpt taken from the NDAQ 8-K filed Feb 20, 2008.
22. New accounting pronouncements
The Exchange adopted SFAS No. 123(R) Accounting for Share-Based Payment (SFAS 123(R)). This statement addresses the accounting for share-based payment transactions and requires all share-based payment to employees, including grants of employee stock options, to be recognized in the financial statements at their fair values. It requires that share based payments be accounted for using a fair value based method to recognize compensation expense. It also requires that the benefit of tax deductions in excess of recognized compensation cost be reported as a financing cash flow, rather than as an operating cash flow as was required under previous accounting pronouncements.
The Exchange has not previously issued share-based payments to employees. In 2006, the Exchange issued restricted stock units to employees (see note P.3).
In May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error Corrections: a replacement of APB Opinion No. 20 and FASB Statement No. 3. SFAS No. 154 requires that (I) all voluntary changes in accounting principles and (2) changes required by a new accounting pronouncement that does not include specific transition provisions, be applied retrospectively to prior periods financial statements, unless it is impracticable to do so. The effective date of this standard is for fiscal years beginning after December 15, 2005. The adoption of SFAS No. 154 had no effect on the Exchanges disclosure requirements for the year ended of December 31, 2006.
In July 2006, the FASB issued FASB Interpretation (FIN) No. 48, Accounting for Uncertainty in Income Taxesan Interpretation of Statement No. 109. FIN 48 was issued to address financial statement recognition and measurement by an enterprise of a tax position taken, or expected to be taken, in a tax return. The new standard will require several new disclosure in annual financial statements, including (a) the income statement classification of income tax-related interest and penalties and (b) a reconciliation of the total amount of unrecognized tax benefits. The effective date of this standard is for fiscal years beginning after December 15, 2006. The Exchange is currently assessing the impact FIN 48 will have on the Exchanges financial statements.
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. SFAS No. 157 applies under other accounting pronouncements that require or permit fair value measurements, the Board having previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute. Accordingly, SFAS No. 157 does not require any new fair value measurements. Statement No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years.
In September 2006, the FASB issued SFAS No. 158, Employers Accounting for Defined Benefit Pension and Other Postretirement Plans: an amendment of FASB Statements No. 87, 88, 106, and 132(R). SFAS No. 158 requires the Exchange to recognize the funded status of its defined benefit postretirement benefit plan in the Companys statement of financial position. The funded status was previously disclosed in the notes to the Exchanges financial statements, but differed from the amount recognized in the balance sheet. SFAS No. 158 does not change the accounting for the Exchanges defined contribution plan.
The recognition and disclosure provisions of SFAS No. 158 are effective for fiscal years ending after June 15, 2007, for nonpublic entities with defined benefit plans and are to be applied as of the end of the year of adoption. Retrospective application is not permitted. The Exchange voluntarily adopted the recognition and disclosures provisions of SFAS No. 158 effective December 31, 2006. The Exchange uses a December 3 I measurement date for its pension and postretirement health benefit plan, and thus, the measurement date provisions will not affect the Exchange.
At December 31, 2006, the Exchanges projected benefit obligation under its pension, retiree medical health and supplemental executive retirement plans exceeded the fair value of the plan assets, and thus the plans are underfunded. The adoption of SFAS No. 158 had the following effect on the Exchanges balance sheet as of December 31, 2006:
The adoption of SFAS No. 158 did not affect the Exchanges statement of operations for the year ended December 31, 2006, or any prior periods. Application of SFAS No. 158 will not change the calculation of net income in future periods, but will affect accumulated other comprehensive income.
The Exchange does not expect to have any plan assets returned during the year ended December 31, 2007.