Hasbro 2014 Annual Report Download - page 74

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 intercompany balances and transactions have been eliminated.
Preparation of Consolidated Financial Statements
The preparation of the consolidated 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 consolidated financial statements and notes thereto. Actual results could differ from
those estimates.
Fiscal Year
Hasbro’s fiscal year ends on the last Sunday in December. The fiscal years ended December 28, 2014 and
December 29, 2013 were fifty-two week periods while the fiscal year ended December 30, 2012 was a fifty-three
week period.
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. These investments are included in
prepaid expenses and other current assets in the accompanying consolidated balance sheets, and, due to the
nature and business purpose of these investments, 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. Marketable securities also include common stock in a public company arising
from a business relationship which are also included in prepaid expenses and other current assets in the
accompanying consolidated balance sheets. Due to its nature and business purpose, the Company records
unrealized gains and losses on this investment in accumulated other comprehensive loss in the consolidated
balance sheets until it is sold at which point the realized gains or losses will be recognized in the consolidated
statements of operations.
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 collectability
of certain of its accounts, including letters of credit, credit insurance, 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 customer, and
on a quarterly basis, the allowance is reviewed for adequacy and the balance is adjusted to reflect current risk
assessments.
60