NOTES TO CONSOLIDATED FINANCIAL STATEMENTS STOCK-BASED COMPENSATION OTHER The Company uses the measurement rules of APB Opinion No. 25 to account for employee stock options. The use of the fair value method of SFAS No. 123 "Accounting for Stock-Based Compensation" would have resulted in net income/(loss) of $638 million in 2001 (2000 – $714 million; 1999 – $(13) million) and net income/(loss) per share of $1.29 in 2001 (2000 – $1.43; 1999 – $(0.14)). In July 2001, the Financial Accounting Standards Board (FASB) issued SFAS No. 141 "Business Combinations", and SFAS No. 142 "Goodwill and Other Intangible Assets". The CICA has issued standards that are substantially similar to SFAS No. 141 and No. 142. These standards require that the purchase method of accounting be used for all future business combinations. Goodwill resulting from business combinations will not be amortized but will be tested for impairment on at least an annual basis. The initial adoption of the new standard on January 1, 2002 is not expected to have a significant impact on any amounts recorded in the Company’s financial statements. In June 2001, the FASB issued SFAS No. 143 "Accounting for Asset Retirement Obligations", which addresses financial accounting and reporting for obligations associated with asset retirement costs. SFAS No. 143 requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The fair value is added to the carrying amount of the associated asset. The liability is accreted at the end of each period through charges to operating expenses.The Company is required and plans to adopt the provisions of SFAS No. 143 for the quarter ending March 31, 2003. The Company has not yet estimated the impact of adopting this standard. In October 2001, the FASB issued SFAS No. 144 "Accounting for the Impairment or Disposal of Long-term Assets", which addresses the financial accounting and reporting for the impairment or disposal of long-lived assets. SFAS No. 144 supercedes but retains the basic princi- ples of SFAS No. 121 for the impairment of assets to be held and used. Assets classified as held for sale will be measured at the lower of their carrying amount or fair value less cost to sell, and depreciation will cease when the asset or group is classified as held for sale. SFAS No. 144 broadens the definition of disposals to be presented as discontinued operations. The Company will be required to adopt the provisions of SFAS No. 144 on a prospective basis for the period beginning January 1, 2002 and will not result in the restatement of income for 2001 or prior periods. 66 TRANSCANADA