Barnes and Noble 2011 Annual Report Download - page 40

is required to estimate the expected forfeiture rate, and
only recognize expense for those shares expected to vest. If
the Company’s actual forfeiture rate is materially diff erent
from its estimate, the stock-based compensation expense
could be signifi cantly diff erent from what the Company
has recorded in the current period. See Note 3 to the
Consolidated Financial Statements for a further discussion
on stock-based compensation.
Gift Cards
The Company sells gift cards which can be used in its stores
or on Barnes & Noble.com. The Company does not charge
administrative or dormancy fees on gift cards and gift cards
have no expiration dates. Upon the purchase of a gift card,
a liability is established for its cash value. Revenue associ-
ated with gift cards is deferred until redemption of the gift
card. Over time, some portion of the gift cards issued is
not redeemed. The Company estimates the portion of the
gift card liability for which the likelihood of redemption is
remote based upon the Company’s historical redemption
patterns. The Company records this amount in income
on a straight-line basis over a 12-month period begin-
ning in the 13th month after the month the gift card was
originally sold. If actual redemption patterns vary from the
Company’s estimates, actual gift card breakage may diff er
from the amounts recorded. The Company recognized gift
card breakage of $25,904, $21,328, $5,432 and $21,369
during fi scal 2011, fi scal 2010, the transition period and
fi scal 2008, respectively. The Company had gift card liabili-
ties of $311,092 and $292,127 as of April 30, 2011 and May 1,
2010, respectively, which amounts are included in accrued
liabilities.
Reclassifi cations
Certain prior-period amounts have been reclassifi ed for
comparative purposes to conform with the fi scal 2011
presentation.
Reporting Period
On September 30, 2009, the Board of Directors of Barnes
& Noble authorized a change in the Company’s fi scal year
end from the Saturday closest to the last day of January to
the Saturday closest to the last day of April. The Company’s
fi scal year is comprised of 52 or 53 weeks, ending on the
Saturday closest to the last day of April. The reporting
periods ended April 30, 2011, May 1, 2010, May 2, 2009 and
January 31, 2009 contained 52 weeks, 52 weeks, 13 weeks
and 52 weeks, respectively.
Recent Accounting Pronouncements
In December 2010, the FASB issued ASU 2010-28,
Intangibles—Goodwill and Other (Topic 350): When to Perform
Step 2 of the Goodwill Impairment Test for Reporting Units
with Zero or Negative Carrying Amounts (ASU 2010-28). ASU
2010-28 provides amendments to Topic 350 to modify Step
1 of the goodwill impairment test for reporting units with
zero or negative carrying amounts to clarify that, for those
reporting units, an entity is required to perform Step 2 of
the goodwill impairment test if it is more likely than not
that a goodwill impairment exists. In determining whether
it is more likely than not that goodwill impairment exists,
an entity should consider whether there are any adverse
qualitative factors indicating that impairment may exist.
For public entities, the amendments in this ASU are eff ec-
tive for fi scal years, and interim periods within those years,
beginning after December 15, 2010. Early adoption is not
permitted. The Company is still evaluating whether adop-
tion of ASU 2010-28 will have an impact on the Company’s
Fiscal 2012 Consolidated Financial Statements.
In May 2011, the FASB issued ASU 2011-04, Amendments
to Achieve Common Fair Value Measurement and Disclosure
Requirements in U.S. GAAP and IFRSs (ASU 2011-04), which
amends ASC 820, Fair Value Measurement. ASU 2011-04
does not extend the use of fair value accounting, but
provides guidance on how it should be applied where its
use is already required or permitted by other standards
within U.S. GAAP or International Financial Reporting
Standards (IFRSs). ASU 2011-04 changes the wording used
to describe many requirements in U.S. GAAP for measuring
fair value and for disclosing information about fair value
measurements. Additionally, ASU 2011-04 clarifi es the
FASB’s intent about the application of existing fair value
measurements. ASU 2011-04 is eff ective for interim and
annual periods beginning after December 15, 2011 and
is applied prospectively. The Company is still evaluating
whether adoption of ASU 2011-04 will have an impact
on the Company’s Fiscal 2012 Consolidated Financial
Statements.
The FASB is currently working on amendments to exist-
ing accounting standards governing a number of areas
including, but not limited to, accounting for leases. In
August 2010, the FASB issued an exposure draft, “Leases”
(the Exposure Draft), which would replace the existing
guidance in ASC topic 840, “Leases.” Under the Exposure
Draft, among other changes in practice, a lessee’s rights
and obligations under all leases, including existing and new
arrangements, would be recognized as assets and liabili-
ties, respectively, on the balance sheet. Subsequent to the
end of the related comment period, the FASB made several
amendments to the exposure draft, including revising the
defi nition of the “lease term” to include the non-cancelable
lease term plus only those option periods for which there is
signifi cant economic incentive for the lessee to extend or
38 Barnes & Noble, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued