Best Buy 2008 Annual Report Download - page 76

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$ in millions, except per share amounts or as otherwise noted
as a part of deferred rent, in accrued liabilities or long-term included in property and equipment, and amounts reimbursed
liabilities, as appropriate. from the landlord are recorded as financing obligations. Assets
acquired under capital and financing leases are depreciated
At March 1, 2008, and March 3, 2007, deferred rent over the shorter of the useful life of the asset or the lease term,
included in accrued liabilities in our consolidated balance including renewal periods, if reasonably assured.
sheets was $24 and $18, respectively, and deferred rent
included in long-term liabilities in our consolidated balance Goodwill and Intangible Assets
sheets was $265 and $237, respectively.
Goodwill
Prior to fiscal 2007, we capitalized straight-line rent amounts
during the major construction phase of leased properties. Goodwill is the excess of the purchase price over the fair value
Beginning in the first quarter of fiscal 2007, we adopted on a of identifiable net assets acquired in business combinations
prospective basis, Financial Accounting Standards Board accounted for under the purchase method. We do not
(‘‘FASB’’) Staff Position (‘‘FSP’’) No. FAS 13-1, Accounting for amortize goodwill but test it for impairment annually, or when
Rental Costs Incurred During a Construction Period. FSP indications of potential impairment exist, utilizing a fair value
No. FAS 13-1 requires companies to expense rent payments approach at the reporting unit level. A reporting unit is the
for building or ground leases incurred during the construction operating segment, or a business unit one level below that
period. The adoption of FSP No. FAS 13-1 did not have a operating segment, for which discrete financial information is
significant effect on our operating income or net earnings. prepared and regularly reviewed by segment management.
Straight-line rent is expensed as incurred subsequent to the
Tradenames
major construction phase, including the period prior to the
store opening. We have indefinite-lived intangible assets related to our Pacific
Sales and Speakeasy tradenames which are included in the
Transaction costs associated with the sale and leaseback of
Domestic segment. We also have indefinite-lived intangible
properties and any related gain or loss are recognized on a
assets related to our Future Shop and Five Star tradenames,
straight-line basis over the initial period of the lease
which are included in the International segment.
agreements. We do not have any retained or contingent
interests in the properties, nor do we provide any guarantees We determine fair values utilizing widely accepted valuation
in connection with the sale and leaseback of properties, other techniques, including discounted cash flows and market
than a corporate-level guarantee of lease payments. multiple analyses. During the fourth quarter of fiscal 2008, we
completed our annual impairment testing of our goodwill and
We also lease certain equipment under noncancelable
tradenames, using the valuation techniques as described
operating and capital leases. In addition, we have financing
above, and determined there was no impairment.
leases for which the gross cost of constructing the asset is
68