Rite Aid 2015 Annual Report Download - page 72

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RITE AID CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the Years Ended February 28, 2015, March 1, 2014 and March 2, 2013
(In thousands, except per share amounts)
1. Summary of Significant Accounting Policies (Continued)
Property, Plant and Equipment
Property, plant and equipment are stated at cost, net of accumulated depreciation and
amortization. The Company provides for depreciation using the straight-line method over the following
useful lives: buildings—30 to 45 years; equipment—3 to 15 years.
Leasehold improvements are amortized on a straight-line basis over the shorter of the estimated
useful life of the asset or the term of the lease. When determining the amortization period of a
leasehold improvement, the Company considers whether discretionary exercise of a lease renewal
option is reasonably assured. If it is determined that the exercise of such option is reasonably assured,
the Company will amortize the leasehold improvement asset over the minimum lease term, plus the
option period. This determination depends on the remaining life of the minimum lease term and any
economic penalties that would be incurred if the lease option is not exercised.
Capitalized lease assets are recorded at the lesser of the present value of minimum lease payments
or fair market value and amortized over the estimated useful life of the related property or term of the
lease.
The Company capitalizes direct internal and external development costs associated with
internal-use software. Neither preliminary evaluation costs nor costs associated with the software after
implementation are capitalized. For fiscal years 2015, 2014 and 2013, the Company capitalized costs of
approximately $7,550, $6,547 and $5,844, respectively.
Goodwill
The Company recognizes goodwill as the excess of the purchase price over the fair value of the
assets acquired and liabilities assumed during business combinations. The Company accounts for
goodwill under ASC Topic 350, ‘‘Intangibles—Goodwill and Other’’, which does not permit
amortization, but instead requires the Company to perform an annual impairment review, or more
frequently if events or circumstances indicate that impairment may be more likely. See Note 11 for
additional information on goodwill.
Intangible Assets
The Company has certain finite-lived intangible assets that are amortized over their useful lives.
The value of favorable and unfavorable leases on stores acquired in business combinations are
amortized over the terms of the leases on a straight-line basis. Prescription files acquired in business
combinations are amortized over an estimated useful life of ten years on an accelerated basis, which
approximates the anticipated prescription file retention and related cash flows. Purchased prescription
files acquired in other than business combinations are amortized over their estimated useful lives of
five years on a straight-line basis.
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