Hasbro 2010 Annual Report Download - page 57

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HASBRO, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Thousands of Dollars and Shares Except Per Share Data)
(1) Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of Hasbro, Inc. and all majority-owned
subsidiaries (“Hasbro” or the “Company”). Investments representing 20% to 50% ownership interests in other
companies are accounted for using the equity method. All significant intercompany balances and transactions
have been eliminated.
Preparation of Financial Statements
The preparation of financial statements in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions that affect the amounts
reported in the financial statements and notes thereto. Actual results could differ from those estimates.
Reclassifications
Certain amounts in the 2009 and 2008 consolidated financial statements have been reclassified to conform
to the 2010 presentation.
Fiscal Year
Hasbro’s fiscal year ends on the last Sunday in December. Each of the fiscal years in the three-year
period ended December 26, 2010 were fifty-two week periods.
Cash and Cash Equivalents
Cash and cash equivalents include all cash balances and highly liquid investments purchased with a
maturity to the Company of three months or less.
Marketable Securities
Marketable securities consist of investments in private investment funds. For these investments, which are
included in prepaid and other current assets on the accompanying consolidated balance sheets, the Company
has selected the fair value option which requires the Company to record the unrealized gains and losses on
these investments in the consolidated statements of operations at the time they occur.
Accounts Receivable and Allowance for Doubtful Accounts
Credit is granted to customers predominantly on an unsecured basis. Credit limits and payment terms are
established based on extensive evaluations made on an ongoing basis throughout the fiscal year with regard to
the financial performance, cash generation, financing availability and liquidity status of each customer. The
majority of customers are formally reviewed at least annually; more frequent reviews are performed based on
the customer’s financial condition and the level of credit being extended. For customers on credit who are
experiencing financial difficulties, management performs additional financial analyses before shipping orders.
The Company uses a variety of financial transactions, based on availability and cost, to increase the
collectibility of certain of its accounts, including letters of credit, credit insurance, factoring with unrelated
third parties, and requiring cash in advance of shipping.
The Company records an allowance for doubtful accounts based on management’s assessment of the
business environment, customers’ financial condition, historical collection experience, accounts receivable
aging and customer disputes. When a significant event occurs, such as a bankruptcy filing by a specific
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