Ross 2009 Annual Report Download - page 34

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Depreciation and amortization expense. Property and equipment are stated at cost, less accumulated depreciation and
amortization. Depreciation is calculated using the straight-line method over the estimated useful life of the asset, typically ranging
from five to twelve years for equipment and 20 to 40 years for real property. The cost of leasehold improvements is amortized
over the lesser of the useful life of the asset or the applicable lease term.
Lease accounting. When a lease contains “rent holidays” or requires fixed escalations of the minimum lease payments, we
record rental expense on a straight-line basis over the term of the lease and the difference between the average rental amount
charged to expense and the amount payable under the lease is recorded as deferred rent. We amortize deferred rent on a
straight-line basis over the lease term commencing on the possession date. Tenant improvement allowances are included in
other long-term liabilities and are amortized over the lease term. Tenant improvement allowances are included as a component
of operating cash flows in the consolidated Statements of Cash Flows.
Self-insurance. We self insure certain of our workers’ compensation and general liability risks as well as certain coverages
under our health plans. Our self-insurance liability is determined actuarially, based on claims filed and an estimate of claims
incurred but not reported. Should a greater amount of claims occur compared to what is estimated or the costs of medical care
increase beyond what was anticipated, our recorded reserves may not be sufficient and additional charges could be required.
Stock-based compensation. We recognize compensation expense based upon the grant date fair value of all
stock-based awards, typically over the vesting period. We use historical data to estimate pre-vesting forfeitures and to
recognize stock-based compensation expense. All stock-based compensation awards are expensed over the service or
performance periods of the awards.
Income taxes. We account for our uncertain tax positions in accordance with Accounting Standards Codification (“ASC”) 740.
We are required to make assumptions and judgments regarding our income tax exposures. Our policy is to recognize interest
and/or penalties related to all tax positions in income tax expense. To the extent that accrued interest and penalties do not
ultimately become payable, amounts accrued will be reduced and reflected as a reduction of the overall income tax provision in
the period that such determination is made.
The critical accounting policies noted above are not intended to be a comprehensive list of all of our accounting policies. In
many cases, the accounting treatment of a particular transaction is specifically dictated by Generally Accepted Accounting
Principles (“GAAP”), with no need for management’s judgment in their application. There are also areas in which management’s
judgment in selecting one alternative accounting principle over another would not produce a materially different result. See our
audited consolidated financial statements and notes thereto under Item 8 in this Annual Report on Form 10-K, which contain
accounting policies and other disclosures required by GAAP.
Effects of inflation or deflation. We do not consider the effects of inflation or deflation to be material to our financial position
and results of operations.
New Accounting Pronouncements
In June 2009, the Financial Accounting Standards Board (“FASB”) issued ASC 810 (originally issued as SFAS No. 167,
“Amendments to FASB Interpretation No. 46(R))”. Among other things, ASC 810 responds to concerns about the application of
certain key provisions of FIN 46(R), including those regarding the transparency of the involvement with variable interest entities.
ASC 810 is effective for fiscal years beginning after November 15, 2009. We do not believe the adoption of ASC 810 will have a
material impact on our consolidated financial statements.