Public Storage 2010 Annual Report Download - page 94

PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2010
F-12
undiscounted cash flows attributable to these assets. If there is excess carrying value over such future
undiscounted cash floZV DQ LPSDLUPHQW FKDUJH LV UHFRUGHG IRU WKH H[FHVV RI FDUU\LQJ YDOXH RYHU WKH DVVHWV¶
estimated fair value. Any long-lived assets which we expect to sell or otherwise dispose of prior to their
estimated useful life are stated at the lower of their estimated net realizable value (estimated fair value less cost
to sell) or their carrying value. During 2010, we recorded impairment charges totaling $2,927,000, comprised
of $1,735,000 in real estate facilities (Note 4RIZKLFKLVUHIOHFWHGXQGHU³GLVFRQWLQXHGRSHUDWLRQV´
on our consolidated statements of income, $994,000 in other assets, and $198,000 in intangible assets which is
UHIOHFWHGXQGHU³GLVFRQWLQXHGRSHUDWLRQV´RQRXUFRQVROLGDWHGVWDWHPHQWVRILQFRPH'XULQJ 2009, we recorded
an impairmeQWFKDUJHRIUHIOHFWHGXQGHU³GLVFRQWLQXHGRSHUDWLRQV´RQRXUFRQVROLGDWHGVWDWHPHQWV
of income, in connection with an eminent domain proceeding at one of our facilities. During 2008, we recorded
impairment charges totaling $525,000, including $250,000 of real estate assets and $275,000 of other assets.
We evaluate impairment of goodwill annually by comparing the aggregate book value (including
goodwill) of each reporting unit to their respective estimated fair value. No impairment of our goodwill was
identified in our annual evaluation at December 31, 2010.
Revenue and Expense Recognition
Rental income, which is generally earned pursuant to month-to-month leases for storage space, as well
as late charges and administrative fees, are recognized as earned. Promotional discounts are recognized as a
reduction to rental income over the promotional period, which is generally during the first month of occupancy.
Ancillary revenues and interest and other income are recognized when earned. Equity in earnings of real estate
entities is recognized based on our ownership interest in the earnings of each of the Unconsolidated Entities.
We accrue for property tax expense based upon actual amounts billed for the related time periods and,
in some circumstances due to taxing authority assessment and billing timing and disputes of assessed amounts,
estimates and historical trends. If these estimates are incorrect, the timing and amount of expense recognition
could be affected. Cost of operations, general and administrative expense, interest expense, as well as
television, yellow page, and other advertising expenditures are expensed as incurred.
Foreign Currency Exchange Translation
The local currency is the functional currency for the foreign operations we have an interest in. Assets
and liabilities included on our consolidated balance sheets, including our equity investment in, and our loan
receivable from, Shurgard Europe, are translated at end-of-period exchange rates, while revenues, expenses, and
equity in earnings in the related real estate entities, are translated at the average exchange rates in effect during
the period. The Euro, which represents the functional currency used by a majority of the foreign operations we
have an interest in, was translated at an end-of-period exchange rate of approximately 1.325 U.S. Dollars per
Euro at December 31, 2010 (1.433 at December 31, 2009), and average exchange rates of 1.326, 1.393 and
1.470 for the years ended December 31, 2010, 2009 and 2008, respectively. Equity is translated at historical
rates and the resulting cumulative translation adjustments, to the extent not included in net income, are included
as a component of accumulated other comprehensive income (loss) until the translation adjustments are
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translation gains and losses.
Fair Value Accounting
As the term is used in oXUILQDQFLDOVWDWHPHQWV³IDLUYDOXH´LVDQH[LWSULFHUHSUHVHQWLQJWKHDPRXQW
that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants. We prioritize the inputs used in measuring fair value based upon a three-tier fair value hierarchy
described in the FASB Codification Section 820-10-35. 6HH³/RDQ5HFHLYDEOHIURP6KXUJDUG(XURSH´EHORZ
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information regarding our fair value measurements.