Kimberly-Clark 2015 Annual Report Download - page 40

amounts.Beginninginthefirstquarterof2016,wewillnolongerincludetheresultsofourVenezuelanbusinessinourconsolidatedfinancialstatements.
Net sales of K-C Venezuela represented approximately 3percent and2percent of consolidated net sales for the years ended December 31, 2014and2013,
respectively,andwereinsignificantin2015.
UseofEstimates
Thepreparationoffinancialstatementsrequiresmanagementtomakeestimatesandassumptionsthataffectthereportedamountsofassetsandliabilitiesatthedate
ofthefinancialstatementsandthereportedamountsofnetsalesandexpensesduringthereportingperiods.Actualresultscoulddifferfromtheseestimates,and
changesintheseestimatesarerecordedwhenknown.Estimatesareusedinaccountingfor,amongotherthings,salesincentivesandtradepromotionallowances,
employeepostretirementbenefits,anddeferredincometaxesandpotentialassessments.
CashEquivalents
Cashequivalentsareshort-terminvestmentswithanoriginalmaturitydateofthreemonthsorless.
InventoriesandDistributionCosts
MostU.S.inventoriesarevaluedatthelowerofcost,usingtheLast-In,First-Out("LIFO")method,ormarket.ThebalanceoftheU.S.inventoriesandinventories
ofconsolidatedoperationsoutsidetheU.S.arevaluedatthelowerofcostandnetrealizablevalueusingeithertheFirst-In,First-Out("FIFO")orweighted-average
costmethods.Netrealizablevalueistheestimatedsellingpricesintheordinarycourseofbusiness,lessreasonablypredictablecostsofcompletion,disposal,and
transportation.Distributioncostsareclassifiedascostofproductssold.
PropertyandDepreciation
Property, plant and equipment are stated at cost and are depreciated on the straight-line method. Buildings are depreciated over their estimated useful lives,
primarily40years.Machinery andequipmentaredepreciatedovertheirestimatedusefullives, primarilyrangingfrom16to20years.Purchasesofcomputer
software, including external costs and certain internal costs (including payroll and payroll-related costs of employees) directly associated with developing
significantcomputersoftwareapplicationsforinternaluse,arecapitalized.Computersoftwarecostsareamortizedonthestraight-linemethodovertheestimated
usefullifeofthesoftware,whichgenerallydoesnotexceed5years.
Estimatedusefullivesareperiodicallyreviewedand,whenwarranted,changesaremadetothem.Long-livedassetsarereviewedforimpairmentwheneverevents
orchanges incircumstances indicatethattheir carryingamount maynot berecoverable. Animpairment losswould beindicated whenestimated undiscounted
futurecashflowsfromtheuseandeventualdispositionofanassetgroup,whichareidentifiableandlargelyindependentofthecashflowsofotherassetgroups,
arelessthanthecarryingamountoftheassetgroup.Measurementofanimpairmentlosswouldbebasedontheexcessofthecarryingamountoftheassetgroup
overitsfairvalue.Fairvalueismeasuredusingdiscountedcashflowsorindependentappraisals,asappropriate.Whenpropertyissoldorretired,thecostofthe
propertyandtherelatedaccumulateddepreciationareremovedfromtheConsolidatedBalanceSheetandanygainorlossonthetransactionisincludedinincome.
GoodwillandOtherIntangibleAssets
Goodwillrepresentscostsinexcessoffairvaluesassignedtotheunderlyingnetassetsofacquiredbusinesses.Goodwillisnotamortized,butratherisassessedfor
impairment annually and whenever events and circumstances indicate that impairment may have occurred.  Impairment testing compares the reporting unit
carryingamountofgoodwillwithitsfairvalue.Ifthereportingunitcarryingamountofgoodwillexceedsitsfairvalue,animpairmentchargewouldberecorded.
Inourevaluationofgoodwillimpairment,wehavetheoptiontofirstassessqualitativefactorssuchasmacroeconomic,industryandcompetitiveconditions,legal
andregulatoryenvironment,historicalandprojectedfinancialperformance,significantchangesinthereportingunitandthemagnitudeofexcessfairvalueover
carryingamountfromthepreviousquantitativeimpairmenttesting.Ifthequalitativeassessmentdeterminesthatitismorelikelythannotthatthefairvalueofa
reportingunitislessthanitscarryingamount,thenaquantitativeimpairmenttestusingdiscountedcashflowstoestimatefairvaluemustbeperformed.Onthe
otherhand,ifthequalitativeassessmentdeterminesthatitismorelikelythannotthatthefairvalueofareportingunitismorethanitscarryingvalue,thenfurther
quantitativetestingisnotrequired.For2015,wehavecompletedtherequiredannualassessmentofgoodwillforimpairmentforallofourreportingunitsusinga
qualitativeassessmentasofthefirstdayofthethirdquarter,andhavedeterminedthatitismorelikelythannotthatthefairvalueismorethanthecarryingamount
foreachofourreportingunits.
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36 KIMBERLY-CLARKCORPORATION - 2015 Annual Report