Dollar General 2008 Annual Report Download - page 75

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the “implied fair value” of goodwill, which would be compared to its corresponding carrying
value.
Other assets
Other assets consist primarily of long-term investments, qualifying prepaid expenses,
debt issuance costs which are amortized over the life of the related obligations, and utility and
security deposits. Such debt issuance costs increased substantially subsequent to the Merger as
further discussed in Notes 2 and 6.
Vendor rebates
The Company accounts for all cash consideration received from vendors in accordance
with the provisions of Emerging Issues Task Force Issue (“EITF”) 02-16, “Accounting by a
Customer (Including a Reseller) for Certain Consideration Received from a Vendor.” Cash
consideration received from a vendor is generally presumed to be a rebate or an allowance and is
accounted for as a reduction of merchandise purchase costs and classified as a current or long
term liability, as applicable, until recognition in the statement of operations at the time the goods
are sold. However, certain specific, incremental and otherwise qualifying SG&A expenses
related to the promotion or sale of vendor products may be offset by cash consideration received
from vendors, in accordance with arrangements such as cooperative advertising, when earned for
dollar amounts up to but not exceeding actual incremental costs. The Company recognizes
amounts received for cooperative advertising on performance, “first showing” or distribution,
consistent with its policy for advertising expense in accordance with the American Institute of
Certified Public Accountants Statement of Position 93-7, “Reporting on Advertising Costs.”
Rent expense
Rent expense is recognized over the term of the lease. The Company records minimum
rental expense on a straight-line basis over the base, non-cancelable lease term commencing on
the date that the Company takes physical possession of the property from the landlord, which
normally includes a period prior to the store opening to make necessary leasehold improvements
and install store fixtures. When a lease contains a predetermined fixed escalation of the
minimum rent, the Company recognizes the related rent expense on a straight-line basis and
records the difference between the recognized rental expense and the amounts payable under the
lease as deferred rent. Tenant allowances, to the extent received, are recorded as deferred
incentive rent and are amortized as a reduction to rent expense over the term of the lease. Any
difference between the calculated expense and the amounts actually paid are reflected as a
liability, with the current portion in Accrued expenses and other and the long-term portion in
Other liabilities in the consolidated balance sheets, and totaled approximately $7.7 million and
$3.7 million at January 30, 2009 and February 1, 2008, respectively.
The Company recognizes contingent rental expense when the achievement of specified
sales targets are considered probable, in accordance with EITF Issue 98-9, “Accounting for
Contingent Rent.” The amount expensed but not paid as of January 30, 2009 and February 1,