Polaris 2015 Annual Report Download - page 78

Polaris measures certain assets and liabilities at fair value on a nonrecurring basis. Assets acquired and
liabilities assumed as part of acquisitions are measured at fair value. Refer to Note 5 for additional
information. Polaris will impair or write off an investment and recognize a loss when events or circumstances
indicate there is impairment in the investment that is other-than-temporary. The amount of loss is determined
by measuring the investment at fair value. Refer to Note 9 for additional information.
Cash equivalents. Polaris considers all highly liquid investments purchased with an original maturity of 90 days
or less to be cash equivalents. Cash equivalents are stated at cost, which approximates fair value. Such
investments consist principally of money market mutual funds.
Allowance for doubtful accounts. Polaris’ financial exposure to collection of accounts receivable is limited due
to its agreements with certain finance companies. For receivables not serviced through these finance
companies, the Company provides a reserve for doubtful accounts based on historical rates and trends. This
reserve is adjusted periodically as information about specific accounts becomes available.
Inventories. Inventory costs include material, labor, and manufacturing overhead costs, including depreciation
expense associated with the manufacture and distribution of the Company’s products. Inventories are stated at
the lower of cost (first-in, first-out method) or market. The major components of inventories are as follows (in
thousands):
December 31, December 31,
2015 2014
Raw materials and purchased components .......... $167,569 $165,823
Service parts, garments and accessories ............. 189,731 163,455
Finished goods .............................. 388,970 262,578
Less: reserves ............................... (36,269) (26,171)
Inventories ................................. $710,001 $565,685
Investment in finance affiliate. The caption investment in finance affiliate in the consolidated balance sheets
represents Polaris’ fifty percent equity interest in Polaris Acceptance, a partnership agreement between GE
Commercial Distribution Finance Corporation (‘‘GECDF’’) and one of Polaris’ wholly-owned subsidiaries.
Polaris Acceptance provides floor plan financing to Polaris dealers in the United States. Polaris’ investment in
Polaris Acceptance is accounted for under the equity method, and is recorded as investment in finance
affiliate in the consolidated balance sheets. Polaris’ allocable share of the income of Polaris Acceptance has
been included as a component of income from financial services in the consolidated statements of income.
Refer to Note 8 for additional information regarding Polaris’ investment in Polaris Acceptance.
Investment in other affiliates. Polaris’ investment in other affiliates is included within other long-term assets in
the consolidated balance sheets, and represents the Company’s investment in nonmarketable securities of
strategic companies. For each investment, Polaris assesses the level of influence in determining whether to
account for the investment under the cost method or equity method. For equity method investments, Polaris’
proportionate share of income or losses is recorded in the consolidated statements of income. Polaris will
write down or write off an investment and recognize a loss if and when events or circumstances indicate there
is impairment in the investment that is other-than-temporary. Refer to Note 9 for additional information
regarding Polaris’ investment in other affiliates.
Property and equipment. Property and equipment is stated at cost. Depreciation is provided using the
straight-line method over the estimated useful life of the respective assets, ranging from 10–40 years for
buildings and improvements and from 1–7 years for equipment and tooling. Depreciation of assets recorded
under capital leases is included with depreciation expense. Fully depreciated tooling is eliminated from the
accounting records annually.
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