Sallie Mae 2013 Annual Report Download - page 162

SLM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. Significant Accounting Policies (Continued)
Income Taxes
We account for income taxes under the asset and liability approach which requires the recognition of
deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the
carrying amounts and tax basis of our assets and liabilities. To the extent tax laws change, deferred tax assets and
liabilities are adjusted in the period that the tax change is enacted.
“Income tax expense/(benefit)” includes (i) deferred tax expense/(benefit), which represents the net change
in the deferred tax asset or liability balance during the year plus any change in a valuation allowance, and
(ii) current tax expense/(benefit), which represents the amount of tax currently payable to or receivable from a
tax authority plus amounts accrued for unrecognized tax benefits. Income tax expense/(benefit) excludes the tax
effects related to adjustments recorded in equity.
If we have an uncertain tax position, then that tax position is recognized only if it is more likely than not to
be sustained upon examination based on the technical merits of the position. The amount of tax benefit
recognized in the financial statements is the largest amount of benefit that is more than fifty percent likely of
being sustained upon ultimate settlement of the uncertain tax position. We recognize interest related to
unrecognized tax benefits in income tax expense/(benefit), and penalties, if any, in operating expenses.
Earnings (Loss) per Common Share
We compute earnings (loss) per common share (“EPS”) by dividing net income allocated to common
shareholders by the weighted average common shares outstanding. Net income allocated to common
shareholders represents net income applicable to common shareholders (net income adjusted for preferred stock
dividends including dividends declared, accretion of discounts on preferred stock including accelerated accretion
when preferred stock is repaid early, and cumulative dividends related to the current dividend period that have
not been declared as of period end). Diluted earnings per common share is computed by dividing income
allocated to common shareholders by the weighted average common shares outstanding plus amounts
representing the dilutive effect of stock options outstanding, restricted stock, restricted stock units, and the
outstanding commitment to issue shares under the Employee Stock Purchase Plan. See “Note 10 — Earnings
(Loss) per Common Share” for further discussion.
Discontinued Operations
A “Component” of a business comprises operations and cash flows that can be clearly distinguished
operationally and for financial reporting purposes from the rest of the Company. When we determine that a
Component of our business has been disposed of or has met the criteria to be classified as held-for-sale such
Component is presented separately as discontinued operations if the operations of the Component have been or
will be eliminated from our ongoing operations and we will have no continuing involvement with the Component
after the disposal transaction is complete. If a Component is classified as held-for-sale, then it is carried at the
lower of its cost basis or fair value. Included within discontinued operations are the accounting results related to
our Campus Solutions and 529 college-savings plan administration business, which have been sold as of
December 31, 2013. See “Note 16 — Discontinued Operations” for further discussion.
Statement of Cash Flows
Included in our financial statements is the consolidated statement of cash flows. It is our policy to include
all derivative net settlements, irrespective of whether the derivative is a qualifying hedge, in the same section of
the statement of cash flows that the derivative is economically hedging.
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