Tyson Foods 2015 Annual Report Download - page 38
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Please find page 38 of the 2015 Tyson Foods annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.CRITICAL ACCOUNTING ESTIMATES
Thepreparationofconsolidatedfinancialstatementsrequiresustomakeestimatesandassumptions.Theseestimatesandassumptionsaffectthereportedamounts
ofassetsandliabilitiesanddisclosureofcontingentassetsandliabilitiesatthedateoftheconsolidatedfinancialstatementsandthereportedamountsofrevenues
andexpensesduringthereportingperiod.Actualresultscoulddifferfromthoseestimates.Thefollowingisasummaryofcertainaccountingestimatesweconsider
critical.
Description
Judgments and Uncertainties
Effect if Actual Results Differ From
Assumptions
Contingent liabilities
Wearesubjecttolawsuits,investigationsandother
claimsrelatedtowageandhour/labor,
environmental,product,taxingauthoritiesand
othermatters,andarerequiredtoassessthe
likelihoodofanyadversejudgmentsoroutcomes
tothesematters,aswellaspotentialrangesof
probablelosses.
Adeterminationoftheamountofreservesand
disclosuresrequired,ifany,forthesecontingencies
ismadeafterconsiderableanalysisofeach
individualissue.Weaccrueforcontingent
liabilitieswhenanassessmentoftheriskoflossis
probableandcanbereasonablyestimated.We
disclosecontingentliabilitieswhentheriskofloss
isreasonablypossibleorprobable.
Ourcontingentliabilitiescontainuncertainties
becausetheeventualoutcomewillresultfromfuture
events,anddeterminationofcurrentreserves
requiresestimatesandjudgmentsrelatedtofuture
changesinfactsandcircumstances,differing
interpretationsofthelawandassessmentsofthe
amountofdamages,andtheeffectivenessof
strategiesorotherfactorsbeyondourcontrol.
Wehavenotmadeanymaterialchangesinthe
accountingmethodologyusedtoestablishour
contingentliabilitiesduringthepastthreefiscal
years.
Wedonotbelievethereisareasonablelikelihood
therewillbeamaterialchangeintheestimatesor
assumptionsusedtocalculateourcontingent
liabilities.However,ifactualresultsarenot
consistentwithourestimatesorassumptions,we
maybeexposedtogainsorlossesthatcouldbe
material.
Marketing and advertising costs
Weincuradvertising,retailerincentiveand
consumerincentivecoststopromoteproducts
throughmarketingprograms.Theseprograms
includecooperativeadvertising,volumediscounts,
in-storedisplayincentives,couponsandother
programs.
Marketingandadvertisingcostsarechargedinthe
periodincurred.Weaccruecostsbasedonthe
estimatedperformance,historicalutilizationand
redemptionofeachprogram.
Cashconsiderationgiventocustomersis
consideredareductioninthepriceofourproducts,
thusrecordedasareductiontosales.The
remainderofmarketingandadvertisingcostsis
recordedasaselling,generalandadministrative
expense.
Recognitionofthecostsrelatedtotheseprograms
containsuncertaintiesduetojudgmentrequiredin
estimatingthepotentialperformanceandredemption
ofeachprogram.
Theseestimatesarebasedonmanyfactors,
includingexperienceofsimilarpromotional
programs.
Wehavenotmadeanymaterialchangesinthe
accountingmethodologyusedtoestablishour
marketingaccrualsduringthepastthreefiscalyears.
Wedonotbelievethereisareasonablelikelihood
therewillbeamaterialchangeintheestimatesor
assumptionsusedtocalculateourmarketing
accruals.However,ifactualresultsarenot
consistentwithourestimatesorassumptions,we
maybeexposedtogainsorlossesthatcouldbe
material.
A10%changeinourmarketingaccrualsatOctober
3,2015,wouldimpactpretaxearningsby
approximately$19million.
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