GameStop 2014 Annual Report Download - page 55

Estimate Description Judgment and/or Uncertainty Potential Impact if Results Differ
Income Taxes
We account for income taxes utilizing
an asset and liability approach, and
deferred taxes are determined based on
the estimated future tax effect of
differences between thefinancial
reporting and tax bases of assets and
liabilities using enacted tax rates.Asa
result of our operations in many foreign
countries, our global tax rate is derived
from acombination of applicable tax
rates in the various jurisdictions in
which we operate.
We maintain accruals for uncertain tax
positions until examination of the tax
year is completed by the taxing
authority,available review periods
expire or additional facts and
circumstances cause us to change our
assessment of the appropriate accrual
amount. Our liability for uncertain tax
positions was $21.4 million as of
January 31, 2015.
Additionally,avaluation allowance is
recorded against adeferred tax assetifit
is not more likely than not that the asset
will be realized. Several factors are
considered in evaluating the
realizability of our deferred tax assets,
including the remaining years available
for carry forward, the tax laws for the
applicable jurisdictions, the future
profitability of the specific business
units, and tax planning strategies.Our
valuation allowance was $24.3 million
as of January 31, 2015. See Note 13 to
our consolidated financial statements
for further information regarding
income taxes.
Considerable management judgment is
necessary to assess the inherent
uncertainties related to the
interpretations of complex tax laws,
regulations and taxing authority rulings,
as well as to the expiration of statutes of
limitations in the jurisdictions in which
we operate.
We base ourestimate of an annual
effective tax rate at anygiven point in
time on acalculated mix of the tax rates
applicable to ouroperations and to
estimates of the amount of income to be
derived in any given jurisdiction. We
file our tax returns based on our
understanding of the appropriate tax
rules and regulations. However,
complexities in the tax rules and our
operations,aswell as positions taken
publicly by thetaxing authorities, may
lead us to conclude that accruals for
uncertain tax positions are required.
Additionally,several factors are
considered in evaluating the realizability
of ourdeferred tax assets, including the
remaining years available for carry
forward, the tax laws for the applicable
jurisdictions, thefutureprofitability of
the specific business units, and tax
planning strategies.
Our judgments and estimates concerning
uncertain tax positions may change as a
result of evaluation of new information,
such as the outcome of tax audits or
changes to or further interpretations of tax
laws and regulations. Our judgments and
estimates concerning realizability of
deferred tax assetscouldchangeifany of
the evaluation factors change.
If such changes take place, there is arisk
that our effective tax rate could increase
or decrease inany period, impacting our
netearnings.
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