Best Buy 2005 Annual Report Download - page 61

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Effect if Actual Results Differ from
Description Judgments and Uncertainties Assumptions
Long-Lived Assets
Long-lived assets other than goodwill and Our impairment loss calculations contain We have not made any material changes
indefinite-lived intangible assets, which are uncertainties because they require to our impairment loss assessment
separately tested for impairment, are management to make assumptions methodology during the past three fiscal
evaluated for impairment whenever events regarding and to apply judgment in years.
or changes in circumstances indicate that estimating future cash flows and asset fair We do not believe there is a reasonable
the carrying value may not be recoverable. values, including forecasting useful lives of likelihood that there will be a material
the assets and selecting the discount rate
When evaluating long-lived assets for change in the future assumptions or
that reflects the risk inherent in future cash
potential impairment, we first compare the estimates we use to calculate long-lived
flows.
carrying value of the asset to the asset’s asset impairment losses. However, if actual
estimated future cash flows (undiscounted results are not consistent with our
and without interest charges). If the assumptions and estimates used in
estimated future cash flows are less than estimating future cash flows and asset fair
the carrying value of the asset, we values, we may be exposed to additional
calculate an impairment loss. The impairment losses that could be material.
impairment loss calculation compares the
carrying value of the asset to the asset’s
estimated fair value, which may be based
on estimated future cash flows (discounted
and with interest charges). We recognize
an impairment loss if the amount of the
asset’s carrying value exceeds the asset’s
estimated fair value. If we recognize an
impairment loss, the adjusted carrying
amount of the asset becomes its new cost
basis. For a depreciable long-lived asset,
the new cost basis will be depreciated
(amortized) over the remaining useful life
of that asset.
Using the impairment evaluation
methodology described herein, we
recorded long-lived asset impairment
charges totaling $22 million, in the
aggregate, during the fiscal year ended
February 26, 2005.
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