3. Recent Accounting Pronouncements In September 20

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THE MEDICINES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. Recent Accounting Pronouncements
In September 2006, the FASB issued SFAS No. 157, ‘‘Fair Value Measurement’’ (SFAS No. 157).
SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted
accounting principles and establishes a hierarchy that categorizes and prioritizes the sources to be used
to estimate fair value. SFAS No. 157 also expands financial statement disclosures about fair value
measurements. On February 12, 2008, the FASB issued FASB Staff Position 157-b (FSP 157-b) which
delays the effective date of SFAS No. 157 for one year, for all nonfinancial assets and nonfinancial
liabilities, except those that are recognized or disclosed at fair value in the financial statements on a
recurring basis (at least annually). SFAS No. 157 and FSP 157-b are effective for financial statements
issued for fiscal years beginning after November 15, 2007. The Company has elected a partial deferral
of SFAS No. 157 under the provisions of FSP 157-b related to the measurement of fair value used
when evaluating intangible assets and other long-lived assets for impairment and valuing liabilities for
exit or disposal activities. The impact of partially adopting SFAS No. 157 effective January 1, 2008 is
not expected to be material to the Company’s 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 SFAS 115’’ (SFAS No. 159), which permits, but
does not require, the Company to measure financial instruments and certain other items at fair value.
Unrealized gains and losses on items for which the fair value option has been elected are reported in
earnings. This statement is effective for financial statements issued for fiscal years beginning after
November 15, 2007. As the Company has not elected to fair value any of its financial instruments
under the provisions of SFAS No. 159, the adoption of this statement will not have any impact to the
Company’s financial statements.
In June 2007, the Emerging Issues Task Force issued EITF Issue 07-03, ‘‘Accounting for Advance
Payments for Goods or Services to Be Used in Future Research and Development’’ (EITF 07-03).
EITF 07-03 addresses the diversity in practice with respect to accounting for non-refundable portions of
payments made by a research and development entity for future research and development activities.
Under EITF 07-03, an entity would defer and capitalize non-refundable advance payments made for
research and development activities until the related goods are delivered or the related services are
performed. EITF 07-03 is effective for fiscal years beginning after December 15, 2007 and interim
periods within those years. The Company does not expect the adoption of EITF 07-03 will have a
material impact on its consolidated financial position or results of operations.
In December 2007, the FASB issued SFAS No. 141(R), ‘‘Business Combinations’’ (SFAS
No. 141(R)), to replace SFAS No. 141, ‘‘Business Combinations’’. SFAS No. 141(R) requires use of the
acquisition method of accounting, defines the acquirer, establishes the acquisition date and broadens
the scope to all transactions and other events in which one entity obtains control over one or more
other businesses. This statement is effective for financial statements issued for fiscal years beginning on
or after December 15, 2008 with earlier adoption prohibited. While there will be no impact to the
Company’s financial statements on the accounting for acquisitions completed prior to December 31,
2008, the adoption of SFAS No. 141(R) on January 1, 2009 could materially change the accounting for
business combinations consummated after that date.
In December 2007, the FASB issued SFAS No. 160, ‘‘Noncontrolling Interests in Consolidated
Financial Statements—an amendment of ARB No. 51’’ (SFAS No. 160). SFAS No. 160 establishes
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