Best Buy 2008 Annual Report Download - page 59

Effect if Actual Results Differ From
Description Judgments and Uncertainties Assumptions
Goodwill and Intangible Assets
We evaluate goodwill and other intangible We determine fair value using widely We have not made any material changes
assets for impairment annually and accepted valuation techniques, including in our impairment loss assessment
whenever events or changes in discounted cash flows and market multiple methodology during the past three fiscal
circumstances indicate the carrying value of analyses. These types of analyses contain years.
the goodwill or other intangible assets may uncertainties because they require We do not believe there is a reasonable
not be recoverable. We complete our management to make assumptions and to likelihood that there will be a material
impairment evaluation by performing apply judgment to estimate industry change in the future estimates or
internal valuation analyses, considering economic factors and the profitability of assumptions we use to test for impairment
other publicly available market information future business strategies. It is our policy to losses on goodwill and other intangible
and using an independent valuation firm, conduct impairment testing based on our assets. However, if actual results are not
as appropriate. current business strategy in light of present consistent with our estimates or
industry and economic conditions, as well
In the fourth quarter of fiscal 2008, we assumptions, we may be exposed to an
as future expectations.
completed our annual impairment testing impairment charge that could be material.
of goodwill and other intangible assets
using the methodology described herein,
and determined there was no impairment.
The carrying value of goodwill at March 1,
2008, was $1.1 billion. The carrying value
of tradenames at March 1, 2008, was
$97 million.
Tax Contingencies
Our income tax returns, like those of most Our liability for unrecognized tax benefits Although management believes that the
companies, are periodically audited by contains uncertainties because judgments and estimates discussed herein
domestic and foreign tax authorities. These management is required to make are reasonable, actual results could differ,
audits include questions regarding our tax assumptions and to apply judgment to and we may be exposed to losses or gains
filing positions, including the timing and estimate the exposures associated with our that could be material.
amount of deductions and the allocation of various filing positions. To the extent we prevail in matters for
income among various tax jurisdictions. At Our effective income tax rate is also which a liability has been established, or
any one time, multiple tax years are subject affected by changes in tax law, the tax are required to pay amounts in excess of
to audit by the various tax authorities. In jurisdiction of new stores or business our established liability, our effective
evaluating the exposures associated with ventures, the level of earnings and the income tax rate in a given financial
our various tax filing positions, we record a results of tax audits. statement period could be materially
liability for probable exposures. A number affected. An unfavorable tax settlement
of years may elapse before a particular generally would require use of our cash
matter, for which we have established a and may result in an increase in our
liability, is audited and fully resolved or effective income tax rate in the period of
clarified. We adjust our liability for resolution. A favorable tax settlement may
unrecognized tax benefits and income tax be recognized as a reduction in our
provision in the period in which an effective income tax rate in the period of
uncertain tax position is effectively settled, resolution.
the statute of limitations expires for the
relevant taxing authority to examine the tax
position or when more information
becomes available.
Effective March 4, 2007, we adopted
FIN No. 48, Accounting for Uncertainty in
Income Taxes, an Interpretation of
FASB Statement No. 109. We reported the
cumulative effect of $13 million related to
the adoption of FIN No. 48 as a decrease
to retained earnings at the beginning of
fiscal 2008.
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