Best Buy 2014 Annual Report Download - page 81

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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.
Deferred Compensation. The assets that fund our deferred compensation consist of investments in mutual funds. These
investments were classified as Level 1 as the shares of these mutual funds trade with sufficient frequency and volume to
enable us to obtain pricing information on an ongoing basis.
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.
The following table summarizes the fair value remeasurements for non-restructuring property and equipment impairments,
goodwill impairments and restructuring activities recorded for fiscal 2014 and fiscal 2013 (11-month) ($ in millions):
12-Month 2014 11-Month 2013
Impairments Remaining Net
Carrying Value(1) Impairments Remaining Net Carrying Value (1)
Continuing operations
Property and equipment (non-restructuring) $ 101 $ 10 $ 60 $ 8
Goodwill(2) — — 822 —
Restructuring activities(3)
Property and equipment 9 — 59 —
Investments 16 21 27 38
Total $ 126 $ 31 $ 968 $ 46
Discontinued operations(4)
Property and equipment(5) $ 220 $ — $ 11 $ —
Tradename 4 — — —
Total $ 224 $ — $ 11 $ —
(1) Remaining net carrying value approximates fair value.
(2) See Note 1, Significant Accounting Policies, for additional information.
(3) See Note 6, Restructuring Charges, for additional information.
(4) Property and equipment and tradename impairments associated with discontinued operations are recorded within gain (loss) from discontinued operations
in our Consolidated Statements of Earnings.
(5) Includes the $175 million impairment to write down the book value of our investment in Best Buy Europe to fair value. Upon completion of the sale of
Best Buy Europe as described in Note 4, Discontinued Operations, the remaining net carrying values of all assets have been reduced to zero.
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.