GameStop 2004 Annual Report Download - page 69

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GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Foreign Currency Translation
Gamestop has determined that the functional currency of its foreign subsidiary is the subsidiary's local
currency (the EURO). The assets and liabilities of the subsidiary are translated at the applicable exchange
rate as of the end of the balance sheet date and revenue and expenses are translated at an average rate over the
period. Currency translation adjustments are recorded as a component of other comprehensive income.
Net Earnings Per Common Share
Net earnings per Class A and Class B common share is presented in accordance with Statement of
Financial Accounting Standards No. 128, ""Earnings Per Share'' (""SFAS 128''). Basic earnings per Class A
and Class B common share is computed using the weighted average number of common shares outstanding
during the period and excludes any dilutive eÅects of the Company's outstanding options.
Diluted earnings per Class A and Class B common share is computed using the weighted average number
of common and dilutive common shares outstanding during the period. Note 4 provides additional information
regarding net earnings per common share.
Stock Options
Statement of Financial Accounting Standards No. 123, ""Accounting for Stock Based Compensation,''
(""SFAS 123'') encourages but does not require companies to record compensation cost for stock based
employee compensation plans at fair value. As permitted under Statement of Financial Accounting Standards
No. 148, ""Accounting for Stock Based Compensation Ì Transition and Disclosure,'' (""SFAS 148'') which
amended SFAS 123, the Company has elected to continue to account for stock based compensation using the
intrinsic value method prescribed in Accounting Principles Board Opinion No. 25, ""Accounting for Stock
Issued to Employees,'' and related interpretations. Accordingly, compensation cost for stock options is
measured as the excess, if any, of the quoted market price of the Company's stock at the date of the grant over
the amount an employee must pay to acquire the stock. Note 13 provides additional information regarding the
Company's stock option plan.
F-13