GameStop 2009 Annual Report Download - page 78

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recognized in the amount of the excess. The Company completed its annual impairment test of goodwill on the first
day of the fourth quarter of fiscal 2007, fiscal 2008 and fiscal 2009 and concluded that none of its goodwill was
impaired. Note 8 provides additional information concerning the changes in goodwill for the consolidated financial
statements presented.
Other Intangible Assets
Other intangible assets consist primarily of tradenames, leasehold rights and amounts attributed to favorable
leasehold interests recorded as a result of business acquisitions. Intangible assets are recorded apart from goodwill if
they arise from a contractual right and are capable of being separated from the entity and sold, transferred, licensed,
rented or exchanged individually. The useful life and amortization methodology of intangible assets are determined
based on the period in which they are expected to contribute directly to cash flows. Intangible assets that are
determined to have a definite life are amortized over that period. Intangible assets that are determined to have an
indefinite life are not amortized, but are required to be evaluated at least annually for impairment. If the carrying
value of an individual indefinite-life intangible asset exceeds its fair value as determined by its discounted cash
flows, such individual indefinite-life intangible asset is written down by the amount of the excess. The Company
completed its annual impairment tests of indefinite-life intangible assets as of the first day of the fourth quarter of
fiscal 2007, fiscal 2008 and fiscal 2009 and concluded that none of its intangible assets were impaired.
Tradenames which were recorded as a result of the Micromania acquisition are considered indefinite life
intangible assets as they are expected to contribute to cash flows indefinitely and are not subject to amortization, but
are subject to annual impairment testing. Leasehold rights which were recorded as a result of the Micromania
acquisition represent the value of rights of tenancy under commercial property leases for properties located in
France. Rights pertaining to individual leases can be sold by us to a new tenant or recovered by us from the landlord
if the exercise of the automatic right of renewal is refused. Leasehold rights are amortized on a straight-line basis
over the expected lease term not to exceed 20 years with no residual value. Favorable leasehold interests represent
the value of the contractual monthly rental payments that are less than the current market rent at stores acquired as
part of the Micromania acquisition or the EB merger. Favorable leasehold interests are amortized on a straight-line
basis over their remaining lease term with no expected residual value. Note 8 provides additional information
related to the Company’s intangible assets.
Revenue Recognition
Revenue from the sales of the Company’s products is recognized at the time of sale and is stated net of sales
discounts. The sales of used video game products are recorded at the retail price charged to the customer. Sales
returns (which are not significant) are recognized at the time returns are made. Subscription and advertising
revenues are recorded upon release of magazines for sale to consumers. Magazine subscription revenue is
recognized on a straight-line basis over the subscription period. Revenue from the sales of product replacement
plans is recognized on a straight-line basis over the coverage period. The deferred revenues for magazine
subscriptions and deferred financing plans are included in accrued liabilities (see Note 7).
Revenues do not include sales taxes or other taxes collected from customers.
Cost of Sales and Selling, General and Administrative Expenses Classification
The classification of cost of sales and selling, general and administrative expenses varies across the retail
industry. The Company includes purchasing, receiving and distribution costs in selling, general and administrative
expenses, rather than cost of goods sold, in the statement of operations. For the 52 weeks ended January 30, 2010,
January 31, 2009 and February 2, 2008, these purchasing, receiving and distribution costs amounted to $63,589,
$57,037 and $43,928, respectively.
F-10
GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)