Garmin 2002 Annual Report Download - page 47

Note 2. Summary of Significant Accounting Policies (continued)
Cash and Cash Equivalents
For purposes of reporting cash flows, cash and cash equivalents include cash on hand, operating accounts, money market funds,
and securities with maturities of three months or less when purchased. The carrying amount of cash and cash equivalents
approximates fair value, given the short maturity of those instruments.
Inventories
Inventories are stated at the lower of cost or market. Cost is determined using the weighted-average method (which
approximates the first-in, first-out (FIFO) method) by GARMIN and the FIFO method by GII and GEL. Inventories consisted of the
following:
December 28, 2002 December 29, 2001
Raw materials $24,177 $26,381
Work-in-process 10,936 9,582
Finished goods 31,818 34,723
Inventory reserves (9,424) (9,554)
$57,507 $61,132
Property and Equipment
Property and equipment are recorded at cost and depreciated using the straight-line method over the following estimated useful lives:
Buildings and improvements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8–55 years
Office furniture and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3–8 years
Manufacturing and engineering equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3–8 years
Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3–5 years
Long-Lived Assets
In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the Company reviews long-
lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be
fully recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash
flows expected to result from the use and eventual disposition of the asset. That assessment shall be based on the carrying
amount of the asset at the date it is tested for recoverability. An impairment loss shall be measured as the amount by which the
carrying amount of a long-lived asset exceeds its fair value. SFAS No. 144 has not had an impact on the company’s consolidated
financial statements.
Intangible Assets
On December 30, 2001, the Company adopted SFAS No. 142, Goodwill and Other Intangible Assets. The statement addresses how
goodwill and other intangible assets should be accounted for and tested for impairment. The standard requires intangibles to be
identified as either finite-lived or indefinite lived. Indefinite-lived intangible assets are no longer subject to amortization, yet are
to be tested for impairment annually and on an interim basis if events or changes in circumstances between annual tests indicate
that the asset might be impaired. The impairment test requires the determination of the fair value of the intangible asset. If the
fair value of the intangible asset is less than its carrying value, an impairment loss should be recognized in an amount equal to
the difference. The asset will then be carried at its new fair value. Finite lived intangible assets are still subject to amortization
and are reviewed for impairment in accordance with SFAS No. 144. The adoption of this statement did not have a material
impact on the Company.
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