Dillard's 2010 Annual Report Download - page 56

Notes to Consolidated Financial Statements (Continued)
1. Description of Business and Summary of Significant Accounting Policies (Continued)
liabilities are established using statutory tax rates and are adjusted for tax rate changes. Tax positions
are analyzed to determine whether it is ‘‘more likely than not’’ that a tax position will be sustained
upon examination by the appropriate taxing authorities before any part of the benefit can be recorded
in the financial statements. For those tax positions where it is not ‘‘more likely than not’’ that a tax
benefit will be sustained, no tax benefit is recognized. Where applicable, associated interest and
penalties are also recorded.
Shipping and Handling—The Company records shipping and handling reimbursements in service
charges and other income. The Company records shipping and handling costs in cost of sales.
Retirement Benefit Plans—The Company’s retirement benefit plan costs are accounted for using
actuarial valuations. The Company recognizes the funded status of its defined pension plans on the
balance sheet and recognizes changes in the funded status that arise during the period but that are not
recognized as components of net periodic benefit cost, within other comprehensive income, net of
income taxes.
Equity in Losses of Joint Ventures—Equity in losses of joint ventures includes the Company’s
portion of the income or loss of the Company’s unconsolidated joint ventures.
Comprehensive Income (Loss)—Comprehensive income (loss) is defined as the change in equity
(net assets) of a business enterprise during a period from transactions and other events and
circumstances from non-owner sources. It consists of the net income or loss and other gains and losses
affecting stockholders’ equity that, under GAAP, are excluded from net income or loss. One such
exclusion is the amortization of retirement plan and other retiree benefit adjustments, which is the only
item impacting our accumulated other comprehensive loss.
Supply Concentration—The Company purchases merchandise from many sources and does not
believe that the Company was dependent on any one supplier during fiscal 2010.
Reclassifications—Certain items have been reclassified from their prior year classifications to
conform to the current year presentation. These reclassifications had no effect on net income or
stockholders’ equity as previously reported.
New Accounting Pronouncements
Consolidation of Variable Interest Entities
On January 31, 2010, the Company adopted changes issued by the Financial Accounting Standards
Board (FASB) relating to accounting for variable interest entities. These changes require an enterprise
to perform an analysis to determine whether the enterprise’s variable interest or interests give it a
controlling financial interest in a variable interest entity; to require ongoing reassessments of whether
an enterprise is the primary beneficiary of a variable interest entity; to eliminate the solely quantitative
approach previously required for determining the primary beneficiary of a variable interest entity; to
add an additional reconsideration event for determining whether an entity is a variable interest entity
when any changes in facts and circumstances occur such that holders of the equity investment at risk,
as a group, lose the power from voting rights or similar rights of those investments to direct the
activities of the entity that most significantly impact the entity’s economic performance; and to require
enhanced disclosures that will provide users of financial statements with more transparent information
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