CompUSA 2008 Annual Report Download - page 58

23
examination from domestic and foreign tax authorities regarding the amount of taxes due. These
examinations include questions regarding the timing and amount of deductions and the allocation of
income among various tax jurisdictions. We have established, and periodically reevaluate, an estimated
income tax reserve on our consolidated balance sheet to provide for the possibility of adverse outcomes in
income tax proceedings. While management believes that we have identified all reasonably identifiable
exposures and that the reserve we have established for identifiable exposures is appropriate under the
circumstances, it is possible that additional exposures exist and that exposures may be settled at amounts
different than the amounts reserved.
We recognize deferred tax assets and liabilities for the effect of temporary differences between the book
and tax bases of recorded assets and liabilities and for tax loss carry forwards. The realization of net
deferred tax assets is dependent upon our ability to generate sufficient future taxable income. Where it is
more likely than not that some portion or all of the deferred tax asset will not be realized, we have
provided a valuation allowance. If the realization of those deferred tax assets in the future is considered
more likely than not, an adjustment to the deferred tax assets would increase net income in the period
such determination is made. In the event that actual results differ from these estimates or we adjust these
estimates in future periods, an adjustment to the valuation allowance may be required, which could
materially affect our consolidated financial position and results of operations.
Restructuring charges. We have taken restructuring actions in the past and could in the future commence
further restructuring activities which result in recognition of restructuring charges if events make it
necessary. These actions require management to make judgments and utilize significant estimates
regarding the nature, timing and amounts of costs associated with the activity. When we incur a liability
related to a restructuring action, we estimate and record all appropriate expenses, including expenses for
severance and other employee separation costs, facility consolidation costs (including estimates of
sublease income), lease cancellations, asset impairments and any other exit costs. Should the actual
amounts differ from our estimates, the amount of the restructuring charges could be impacted, which
could materially affect our consolidated financial position and results of operations.
Recently Adopted and Newly Issued Accounting Pronouncements
In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial
Accounting Standards (“SFAS”) No. 157 “Fair Value Measurements”. This statement was issued to
increase consistency and comparability in fair value measurements and for expanded disclosures about
fair value measurements. Effective January 1, 2008 the Company adopted the provisions of SFAS No.
157, which did not have a material impact on the Company’ s consolidated financial statements.
In February 2008, the FASB issued FASB Staff Position (“FSP”) FAS 157-2, which provides for a one-
year deferral of the provisions of SFAS No. 157 until fiscal years beginning after December 15, 2008 for
non-financial assets and liabilities that are recognized or disclosed at fair value in the consolidated
financial statements on a non-recurring basis. The Company is currently evaluating the potential impact,
if any, of FSP 157-2.
In April 2008, the FASB issued FSP FAS 142-3 “Determination of the Useful Life of Intangible Assets”.
FSP FAS 142-3 amends the factors that should be considered in developing renewal or extension
assumptions used to determine the useful life of a recognized intangible asset under FASB Statement No.
142, Goodwill and Other Intangible Assets. The intent of this FSP is to improve the consistency between
the useful life of a recognized intangible asset and the period of expected cash flows used to measure the
fair value of the asset. The standard applies prospectively to intangible assets acquired and/or recognized
on or after January 1, 2009. The Company is currently evaluating the impact, if any, the adoption of this
FSP may have on the Company’ s consolidated financial statements.
In June 2008, the FASB issued FASB Staff Position No. EITF 03-6-1 “Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating Securities”. This FSP was issued to
clarify that instruments granted in share-based payment transactions can be participating securities prior