TJ Maxx 2015 Annual Report Download - page 71

2014. Maintenance and repairs are charged to expense as incurred. Significant costs incurred for internally developed
software are capitalized and amortized over 3 to 15 years. Upon retirement or sale, the cost of disposed assets and
the related accumulated depreciation are eliminated and any gain or loss is included in income. Pre-opening costs,
including rent, are expensed as incurred.
Lease Accounting: TJX begins to record rent expense when it takes possession of a store, which is typically 30
to 60 days prior to the opening of the store and generally occurs before the commencement of the lease term, as
specified in the lease. Lease agreements involving property built to our specifications are reviewed to determine if our
involvement in the construction project requires that we account for the project costs as if we were the owner for
accounting purposes. We have entered into several lease agreements where we are deemed the owner of a
construction project for accounting purposes. Thus, during construction of the facility the construction costs incurred
by the lessor are included as a construction in progress asset along with a related liability of the same amount on our
balance sheet. Upon completion of the project, a sale-leaseback analysis is performed to determine if the Company
should record a sale to remove the related asset and related obligation and record the lease as either an operating or
capital lease obligation. If the Company is precluded from derecognizing the asset when construction is complete,
due to continuing involvement beyond a normal leaseback, the lease is accounted for as a financing transaction and
the recorded asset and related financing obligation remain on the Consolidated Balance Sheets. Accordingly, the
asset is depreciated over its estimated useful life in accordance with the Company’s policy and a portion of the lease
payments is allocated to ground rent and treated as an operating lease. The portion of the lease payment allocated to
ground rental expense is based on the fair value of the land at the commencement of construction. Lease payments
allocated to the non-land asset are recognized as reductions to the financing obligation and interest expense.
Long-Lived Assets: Information related to carrying values of TJX’s long-lived assets by geographic location is
presented below:
Fiscal Year Ended
Dollars in thousands
January 30,
2016
January 31,
2015
February 1,
2014
United States $3,101,846 $2,927,297 $2,693,670
Canada 242,705 266,332 214,459
Europe 782,970 674,736 686,372
Australia 10,054 ——
Total long-lived assets $4,137,575 $3,868,365 $3,594,501
Goodwill and Tradenames: Goodwill includes the excess of the purchase price paid over the carrying value of
the minority interest acquired in fiscal 1990 in TJX’s former 83%-owned subsidiary and represents goodwill
associated with the T.J. Maxx chain, as well as the excess of cost over the estimated fair market value of the net
assets acquired by TJX in the purchase of Winners in fiscal 1991, the purchase of Sierra Trading Post in fiscal 2013,
and the purchase of Trade Secret in fiscal 2016 (See Note B). The following is a rollforward of goodwill by component:
Amounts in thousands Marmaxx Winners
Sierra
Trading
Post
Trade
Secret Total
Balance, February 2, 2013 $70,027 $2,226 $98,035 $ — $170,288
Adjustment to purchase price — — (781) — (781)
Effect of exchange rate changes on goodwill — (234) — — (234)
Balance, February 1, 2014 70,027 1,992 97,254 — 169,273
Effect of exchange rate changes on goodwill — (251) — — (251)
Balance, January 31, 2015 70,027 1,741 97,254 — 169,022
Additions — — — 25,233 25,233
Effect of exchange rate changes on goodwill — (154) — (190) (344)
Balance, January 30, 2016 $70,027 $1,587 $97,254 $25,043 $193,911
Goodwill is considered to have an indefinite life and accordingly is not amortized.
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