Plantronics 2015 Annual Report Download - page 60

Product Warranty Obligations
The Company records a liability for the estimated costs of warranties at the time the related revenue is recognized. The specific
warranty terms and conditions range from one to two years starting from the delivery date to the end user and vary depending
upon the product sold and the country in which the Company does business. Factors that affect the warranty obligations include
product failure rates, estimated return rates, the amount of time lapsed from the date of sale to the date of return, material usage,
service related costs incurred in correcting product failure claims, and knowledge of specific product failures that are outside of
the Company’s typical experience.
Goodwill and Purchased Intangibles
Goodwill has been measured as the excess of the cost of acquisition over the amount assigned to tangible and identifiable intangible
assets acquired less liabilities assumed. At least annually, in the fourth quarter of each fiscal year or more frequently if indicators
of impairment exist, management performs a review to determine if the carrying value of goodwill is impaired. The identification
and measurement of goodwill impairment involves the estimation of fair value at the Company’s reporting unit level. The Company
determines its reporting units by assessing whether discrete financial information is available and if segment management regularly
reviews the results of that component. The Company has determined it has one reporting unit.
The Company performs an initial assessment of qualitative factors to determine whether the existence of events and circumstances
leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If,
after assessing the totality of relevant events and circumstances, the Company determines that it is more likely than not that the
fair value of the reporting unit exceeds its carrying value and there is no indication of impairment, no further testing is performed;
however, if the Company concludes otherwise, the first step of the two-step impairment test must be performed by estimating the
fair value of the reporting unit and comparing it with its carrying value, including goodwill.
Intangible assets other than goodwill are carried at cost and amortized over their estimated useful lives. The Company reviews
identifiable finite-lived intangible assets to be held and used for impairment whenever events or changes in circumstances indicate
that the carrying value of the assets may not be recoverable. Determination of recoverability is based on the lowest level of
identifiable estimated undiscounted cash flows resulting from use of the asset and its ultimate disposition. Measurement of any
impairment loss is based on the amount by which the carrying value of the asset exceeds its fair market value.
Property, Plant and Equipment
Property, plant and equipment is stated at cost less accumulated depreciation and amortization. Depreciation is calculated using
the straight-line method over the estimated useful lives of the respective assets, which range from two to thirty years. Amortization
of leasehold improvements is computed using the straight-line method over the shorter of the estimated useful lives of the assets
or the remaining lease term. Capitalized software costs are amortized on a straight-line basis over the estimated useful life of the
assets.
Property, plant and equipment is reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount of such assets may not be recoverable. The Company recognizes an impairment charge in the event the net book value
of such assets exceeds the future undiscounted cash flows attributable to the asset group. No material impairment losses were
incurred in the periods presented.
Fair Value Measurements
All financial assets and liabilities and non-financial assets and liabilities are recognized or disclosed at fair value in the financial
statements. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value
into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant
to the fair value measurement:
Level 1
The Company's Level 1 financial assets consist of mutual funds. The fair value of Level 1 financial instruments is measured based
on the quoted market price of identical securities.
Level 2
The Company's Level 2 financial assets and liabilities consist of Mutual Funds, Government Agency Securities, Commercial
Paper, and Corporate Bonds.
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