Overstock.com 2012 Annual Report Download - page 50
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Table of Contents
regarding overall business and retail industry conditions, operating efficiencies, the competitive environment and changes in regulatory requirements
which may impact our ability to generate taxable income and, in turn, realize the value of our deferred tax assets.
The large operating loss in the prior year and significant economic uncertainties in the market have made the projection of future taxable income
uncertain. Accordingly, we have a valuation allowance recorded against our deferred tax assets as it is not "more likely than not" that the assets will be
realized. To the extent that we remain profitable during the forseeable future, the full or partial release of the valuation allowance could occur in the near
term.
We review property and equipment and other long-lived assets for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset group may not be recoverable. Recoverability is measured by comparison of the assets' carrying amount to future
undiscounted net cash flows the asset group is expected to generate. Cash flow forecasts are based on trends of historical performance and
management's estimate of future performance, giving consideration to existing and anticipated competitive and economic conditions. If such asset group
is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds their fair
values. There were no impairments to long-lived assets recorded during the years ended December 31, 2012, 2011 and 2010.
Goodwill is not amortized, but must be tested for impairment at least annually. We test for impairment of goodwill in the fourth quarter or when we
deem that a triggering event has occurred. Goodwill totaled $2.8 million at December 31, 2012 and 2011. There were no impairments to goodwill
recorded during the years ended December 31, 2012, 2011 and 2010.
In the normal course of business, we are involved in legal proceedings and other potential loss contingencies. We accrue a liability for such matters
when it is probable that a loss has been incurred and the amount can be reasonably estimated. When only a range of possible loss can be estimated, the
most probable amount in the range is accrued. If no amount within this range is a better estimate than any other amount within the range, the minimum
amount in the range is accrued. We expense legal fees as incurred.
See Item 15 of Part IV, "Financial Statements"—Note 2—"Accounting Policies" subheading "Accounting Pronouncements Issued Not Yet
Adopted."
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