Symantec 2011 Annual Report Download - page 144

timing of the annual evaluation for goodwill. These assets generally include tradenames, trademarks and in-process
research and development. Recoverability of infinite-lived intangible assets would be measured by the comparison
of the carrying amount of the asset to the sum of the discounted estimated future cash flows the asset is expected to
generate. If the asset is considered to be impaired, such amount would be measured as the difference between the
carrying amount of the asset and its fair value. Our cash flow assumptions are based on historical and future revenue,
operating costs, and other relevant factors. Assumptions and estimates about the remaining useful lives of our
intangible assets are subjective and are affected by changes to our business strategies. These estimates may be
subject to change.
Income Taxes
The provision for income taxes is computed using the asset and liability method, under which deferred tax
assets and liabilities are recognized for the expected future tax consequences of temporary differences between the
financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carryforwards in each
jurisdiction in which we operate. Deferred tax assets and liabilities are measured using the currently enacted tax
rates that apply to taxable income in effect for the years in which those tax assets are expected to be realized or
settled. We record a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than
not to be realized.
We are required to compute our income taxes in each federal, state, and international jurisdiction in which we
operate. This process requires that we estimate the current tax exposure as well as assess temporary differences
between the accounting and tax treatment of assets and liabilities, including items such as accruals and allowances
not currently deductible for tax purposes. The income tax effects of the differences we identify are classified as
current or long-term deferred tax assets and liabilities in our Consolidated Balance Sheets. Our judgments,
assumptions, and estimates relative to the current provision for income tax take into account current tax laws, our
interpretation of current tax laws, and possible outcomes of current and future audits conducted by foreign and
domestic tax authorities. Changes in tax laws or our interpretation of tax laws and the resolution of current and
future tax audits could significantly impact the amounts provided for income taxes in our Consolidated Balance
Sheets and Consolidated Statements of Operations. We must also assess the likelihood that deferred tax assets will
be realized from future taxable income and, based on this assessment, establish a valuation allowance, if required.
Our determination of our valuation allowance is based upon a number of assumptions, judgments, and estimates,
including forecasted earnings, future taxable income, and the relative proportions of revenue and income before
taxes in the various domestic and international jurisdictions in which we operate. To the extent we establish a
valuation allowance or change the valuation allowance in a period, we reflect the change with a corresponding
increase or decrease to our tax provision in our Consolidated Statements of Operations.
We apply the authoritative guidance on income taxes that prescribes a minimum recognition threshold a tax
position is required to meet before being recognized in the financial statements. It also provides guidance on
derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and
transition.
This guidance prescribes a two-step process to determine the amount of tax benefit to be recognized. The first
step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it
is more likely than not that the position will be sustained on audit, including resolution of related appeals or
litigation processes, if any. The second step requires us to estimate and measure the tax benefit as the largest amount
that is more than 50% likely to be realized upon ultimate settlement. It is inherently difficult and subjective to
estimate such amounts, as this requires us to determine the probability of various possible outcomes. We reevaluate
these uncertain tax positions on a quarterly basis. This evaluation is based on factors including, but not limited to,
changes in facts or circumstances, changes in tax law, effectively settled issues under audit, and new audit activity.
Such a change in recognition or measurement would result in the recognition of a tax benefit or an additional charge
to the tax provision in the period.
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SYMANTEC CORPORATION
Notes to Consolidated Financial Statements — (Continued)