Blackberry 2003 Annual Report Download - page 33

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30
Research฀In฀Motion฀Limited฀฀|฀฀Incorporated฀Under฀the฀Laws฀of฀Ontario฀(United฀States฀dollars,฀in฀thousands฀except฀per฀share฀data฀or฀as฀otherwise฀indicated)
31
For฀the฀years฀ended฀March฀1,฀2003,฀March฀2,฀2002฀and฀February฀28,฀2001
events฀or฀changes฀in฀circumstances฀indicate฀that฀their฀carrying฀amount฀may฀not฀be฀recoverable.฀
If฀such฀an฀event฀occurs,฀the฀intangible฀asset฀is฀written฀down฀to฀its฀recoverable฀value.฀There฀was฀no฀
impact฀to฀retained฀earnings฀as฀a฀result฀of฀the฀adoption฀of฀this฀recommendation.
(l)฀Goodwill฀–฀Effective฀March฀3,฀2002,฀the฀Company฀adopted฀the฀new฀recommendations฀of฀Section฀
3062฀of฀the฀Canadian฀Institute฀of฀Chartered฀Accountants฀(“CICA”)฀Handbook฀(“CICA฀3062”)฀with฀regards฀
to฀goodwill฀and฀intangible฀assets฀and฀accordingly,฀goodwill฀is฀no฀longer฀amortized฀to฀earnings,฀but฀
periodically฀tested฀for฀impairment.฀Upon฀adoption฀of฀these฀new฀recommendations,฀goodwill฀must฀be฀
tested฀for฀impairment฀as฀of฀the฀beginning฀of฀the฀current฀year.฀The฀Company฀performed฀the฀required฀
impairment฀tests฀of฀goodwill฀as฀at฀March฀1,฀2003฀and฀March฀3,฀2002฀and฀concluded฀that฀the฀existing฀
goodwill฀was฀not฀impaired.฀The฀Company฀did฀not฀have฀any฀goodwill฀prior฀to฀the฀adoption฀of฀the฀new฀
recommendation,฀therefore,฀there฀was฀no฀impact฀to฀prior฀year’s฀earnings฀upon฀its฀adoption.
Goodwill฀represents฀the฀excess฀of฀the฀purchase฀price฀of฀business฀acquisitions฀over฀the฀fair฀value฀
of฀identiable฀net฀assets฀acquired฀in฀such฀acquisitions.฀Goodwill฀is฀allocated฀as฀at฀the฀date฀of฀the฀
business฀combination.฀Goodwill฀is฀not฀amortized,฀but฀is฀tested฀for฀impairment฀annually,฀or฀more฀
frequently฀if฀events฀or฀changes฀in฀circumstances฀indicate฀the฀asset฀might฀be฀impaired.฀
The฀impairment฀test฀is฀carried฀out฀in฀two฀steps.฀In฀the฀rst฀step,฀the฀carrying฀amount฀of฀the฀reporting฀
unit฀including฀goodwill฀is฀compared฀with฀its฀fair฀value.฀When฀the฀fair฀value฀of฀a฀reporting฀unit฀exceeds฀
its฀carrying฀amount,฀goodwill฀of฀the฀reporting฀unit฀is฀considered฀not฀to฀be฀impaired,฀and฀the฀second฀
step฀is฀considered฀unnecessary.
In฀the฀event฀that฀the฀fair฀value฀of฀the฀reporting฀unit,฀including฀goodwill,฀is฀less฀than฀the฀carrying฀
value,฀the฀implied฀fair฀value฀of฀the฀reporting฀unit’s฀goodwill฀is฀compared฀with฀its฀carrying฀amount฀to฀
measure฀the฀amount฀of฀the฀impairment฀loss,฀if฀any.฀The฀implied฀fair฀value฀of฀goodwill฀is฀determined฀
in฀the฀same฀manner฀as฀the฀value฀of฀goodwill฀is฀determined฀in฀a฀business฀combination฀using฀the฀fair฀
value฀of฀the฀reporting฀unit฀as฀if฀it฀was฀the฀purchase฀price.฀When฀the฀carrying฀amount฀of฀the฀reporting฀
unit฀goodwill฀exceeds฀the฀implied฀fair฀value฀of฀the฀goodwill,฀an฀impairment฀loss฀is฀recognized฀in฀an฀
amount฀equal฀to฀the฀excess฀and฀is฀presented฀as฀a฀separate฀line฀item฀in฀the฀consolidated฀statements฀
of฀operations฀and฀retained฀earnings.
The฀Company฀has฀one฀reporting฀unit,฀which฀is฀the฀consolidated฀Company.
(m)฀Income฀taxes฀–฀The฀liability฀method฀of฀tax฀allocation฀is฀used฀to฀account฀for฀income฀taxes.฀Under฀
this฀method,฀future฀tax฀assets฀and฀liabilities฀are฀determined฀based฀upon฀differences฀between฀the฀
nancial฀reporting฀and฀tax฀bases฀of฀assets฀and฀liabilities,฀and฀measured฀using฀the฀substantively฀
enacted฀tax฀rates฀and฀laws฀that฀will฀be฀in฀effect฀when฀the฀differences฀are฀expected฀to฀reverse.
(n)฀Revenue฀recognition฀–฀The฀Company฀recognizes฀revenue฀when฀it฀is฀realized฀or฀realizable฀and฀
earned.฀The฀Company฀considers฀revenue฀realized฀or฀realizable฀and฀earned฀when฀it฀has฀persuasive฀
evidence฀of฀an฀arrangement,฀the฀product฀has฀been฀delivered฀or฀the฀services฀have฀been฀provided฀
to฀the฀customer,฀the฀sales฀price฀is฀xed฀or฀determinable฀and฀collectibility฀is฀reasonably฀assured.฀In฀
addition฀to฀this฀general฀policy,฀the฀following฀are฀the฀specic฀revenue฀recognition฀policies฀for฀each฀
major฀category฀of฀revenue.฀
Handheld฀and฀other฀hardware฀products฀Revenue฀from฀the฀sale฀of฀hardware,฀original฀equipment฀
manufacturer฀(“OEM”)฀and฀accessories฀are฀recognized฀when฀title฀is฀transferred฀to฀the฀customer฀and฀
all฀signicant฀contractual฀obligations฀that฀affect฀the฀customer’s฀nal฀acceptance฀have฀been฀fullled.฀
Provisions฀are฀made฀at฀the฀time฀of฀sale฀for฀warranties,฀royalties฀and฀estimated฀product฀returns.฀For฀
hardware฀products฀for฀which฀the฀software฀is฀deemed฀not฀to฀be฀incidental,฀the฀Company฀recognizes฀
revenue฀in฀accordance฀with฀the฀American฀Institute฀of฀Certied฀Public฀Accountants฀Statement฀of฀
Position฀97-2,฀Software฀Revenue฀Recognition฀(“SOP฀97-2”).฀