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I I I I I I I I II I I II I I I I I I I Consul-Tech Enterprises, Inc. and Subsidiaries Notes to Consolidated Financial Statements December 31, 2006 and 2005 A. Summary of Significant Accounting Policies (continued) New Accounting Pronouncements In December 2004 F ASB issued Statement No, 152, Accounting for Real Estate Time-Sharing Transactions, This Statement amends FASB Statement No. 66, Accountingfor Sales of Real Estate, to reference the [mancial accounting and reporting guidance for real estate time-sharing transactions that is provided in AICP A Statement of Position (SOP) 04-2, Accounting for Real Estate Time- Sharing Transactions, This Statement also amends FASB Statement No. 67, Accounting for Costs and Initial Rental Operations of Real Estate Projects, to state that the guidance for (a) incidental operations and (b) costs incurred to sell real estate projects does not apply to real estate time-sharing transactions. The accounting for those operations and costs is subject to the guidance in SOP 04-2. This Statement is effective for [mancial statements for fiscal years beginning after June 15, 2005, Adoption of this statement is not expected to have a significant effect on the Company's results of operations or [mancial position. In December 2004 FASB issued Statement No. 153, Exchanges of Nonmonetary Assets-an amendment of APB Opinion No. 29. The guidance in APB Opinion No. 29, Accounting for Nonmonetary Transactions, is based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. The guidance in that Opinion, however, included certain exceptions to that principle. This Statement amends Opinion 29 to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance, A nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. Adoption of this statement is not expected to have a significant effect on the Company's results of operations or [mancial position. In May 2005 FASB issued Statement No, 154, Accounting Changes and Error Corrections-a replacement of APB Opinion No, 20 and FASB Statement No.3. This Statement replaces APB Opinion No. 20, Accounting Changes, and FASB Statement No.3, Reporting Accounting Changes in Interim Financial Statements, and changes the requirements for the accounting for and reporting of a change in accounting principle. This Statement applies to all voluntary changes in accounting principle. It also applies to. changes required by an accounting pronouncement in the unusual instance that the pronouncement does not include specific transition provisions. When a pronouncement includes specific transition provisions, those provisions should be followed. Opinion 20 previously required that most voluntary changes in accounting principle be .recognized by including in net income of the period of the change the cumulative effect of changing to the new accounting principle. This Statement requires retrospective application to prior periods' [mancial statements of changes in accounting principle, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. Adoption of this statement is not expected to have a significant effect on the Company's results of operations or [mancial position. 9