Best Buy 2013 Annual Report Download - page 84

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84
timing of future interest and principal payments, forward projections of the interest rate benchmarks, the probability of full
repayment of the principal considering the credit quality and guarantees in place, and the rate of return required by
investors to own such securities given the current liquidity risk associated with ARS.
Marketable Equity Securities. Our marketable equity securities were measured at fair value using quoted market prices.
They were classified as Level 1 as they trade in an active market for which closing stock prices are readily available.
Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis
Assets and liabilities that are measured at fair value on a nonrecurring basis relate primarily to our tangible fixed assets,
goodwill and other intangible assets, which are remeasured when the derived fair value is below carrying value on our
Consolidated Balance Sheets. For these assets, we do not periodically adjust carrying value to fair value except in the event of
impairment. When we determine that impairment has occurred, the carrying value of the asset is reduced to fair value and the
difference is recorded within Operating income in our Consolidated Statements of Earnings.
With the exception of the goodwill impairments described in Note 1, Summary of Significant Accounting Policies, as well as
the property and equipment, investment and tradename impairments associated with our fiscal 2013 and fiscal 2012
restructuring activities described in Note 7, Restructuring Charges, we had no significant remeasurements of such assets or
liabilities to fair value during fiscal 2013 (11-month), 2012 and 2011. The following table summarizes the fair value
remeasurements for goodwill impairments and restructuring activities recorded for fiscal 2013 (11-month) and 2012 ($ in
millions):
11-Month 2013 12-Month 2012
Impairments Remaining Net
Carrying Value Impairments Remaining Net
Carrying Value
Continuing operations
Goodwill $ 822 $ — $ 1,207 $ —
Property and equipment 70 — 32 —
Investments 27 38 — —
Total $ 919 $ 38 $ 1,239 $ —
Discontinued operations(1)
Property and equipment $ — $ — $ 111 $ —
Tradename — — 3 —
Total $ — $ — $ 114 $ —
(1) Property and equipment and tradename impairments associated with discontinued operations are recorded within Loss from discontinued operations in
our Consolidated Statements of Earnings.
All of the fair value remeasurements included in the table above were based on significant unobservable inputs (Level 3). Refer
to Note 1, Summary of Significant Accounting Policies, as well as Note 3, Profit Share Buy-Out, for further information
associated with the goodwill impairments. Fixed asset fair values were derived using a DCF model to estimate the present
value of net cash flows that the asset or asset group was expected to generate. The key inputs to the DCF model generally
included our forecasts of net cash generated from revenue, expenses and other significant cash outflows, such as capital
expenditures, as well as an appropriate discount rate. For the tradename, fair value was derived using the relief from royalty
method, as described in Note 1, Summary of Significant Accounting Policies. In the case of these specific assets, for which their
impairment was the result of restructuring activities, no future cash flows have been assumed as the assets will cease to be used
and expected sale values are nominal.
Fair Value of Financial Instruments
Our financial instruments, other than those presented in the disclosures above, include cash, receivables, other investments,
accounts payable, other payables and short- and long-term debt. The fair values of cash, receivables, accounts payable, other
payables and short-term debt approximated carrying values because of the short-term nature of these instruments. If these
instruments were measured at fair value in the financial statements, they would be classified as Level 1 in the fair value
hierarchy. Fair values for other investments held at cost are not readily available, but we estimate that the carrying values for
these investments approximate fair value. See Note 8, Debt, for information about the fair value of our long-term debt.
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