Chili's 2015 Annual Report Download - page 58

portion of the reporting unit that was retained. If we dispose of a restaurant brand and all related restaurants, the
entire goodwill balance associated with the reporting unit or brand will be included in the disposal group for
purposes of determining the gain or loss on the disposition. Additionally, if we sell restaurants with reacquired
franchise rights, we will include those assets in the gain or loss on the disposition.
Reacquired franchise rights are also reviewed for impairment annually or whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. If the carrying amount is not
recoverable, we record an impairment charge for the excess of the carrying amount over the fair value.
Impairment charges are included in other gains and charges in the consolidated statements of comprehensive
income.
(m) Liquor Licenses
The costs of obtaining non-transferable liquor licenses from local government agencies are expensed over
the specified term of the license. The costs of purchasing transferable liquor licenses through open markets in
jurisdictions with a limited number of authorized liquor licenses are capitalized as indefinite-lived intangible
assets and included in intangibles.
Liquor licenses are reviewed for impairment semi-annually or whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. If the carrying amount is not recoverable, we record an
impairment charge for the excess of the carrying amount over the fair value. We determine fair value based on
prices in the open market for licenses in same or similar jurisdictions. Impairment charges are included in other
gains and charges in the consolidated statements of comprehensive income.
(n) Sales Taxes
Sales taxes collected from guests are excluded from revenues. The obligation is included in accrued
liabilities until the taxes are remitted to the appropriate taxing authorities.
(o) Self-Insurance Program
We are self-insured for certain losses related to health, general liability and workers’ compensation. We
maintain stop loss coverage with third party insurers to limit our total exposure. The self-insurance liability
represents an estimate of the ultimate cost of claims incurred and unpaid as of the balance sheet date. The
estimated liability is not discounted and is established based upon analysis of historical data and actuarial
estimates, and is reviewed on a quarterly basis to ensure that the liability is appropriate. If actual trends,
including the severity or frequency of claims, differ from our estimates, our financial results could be impacted.
Accrued and other liabilities include the estimated incurred but unreported costs to settle unpaid claims.
(p) Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in
tax rates is recognized in income in the period that includes the enactment date.
We record a liability for unrecognized tax benefits resulting from tax positions taken, or expected to be
taken, in an income tax return. We recognize any interest and penalties related to unrecognized tax benefits in
income tax expense.
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