Best Buy 2011 Annual Report Download - page 59

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Effect if Actual Results Differ From
Description Judgments and Uncertainties Assumptions
Long-Lived Assets
Long-lived assets other than goodwill and Our impairment loss calculations contain We have not made any material changes
indefinite-lived intangible assets, which are uncertainties because they require in the accounting methodology we use to
separately tested for impairment, are management to make assumptions and to assess impairment loss during the past
evaluated for impairment whenever events apply judgment to estimate future cash three fiscal years.
or changes in circumstances indicate that flows and asset fair values, including We do not believe there is a reasonable
the carrying value may not be recoverable. forecasting useful lives of the assets and likelihood that there will be a material
selecting the discount rate that reflects the
When evaluating long-lived assets for change in the estimates or assumptions we
risk inherent in future cash flows.
potential impairment, we first compare the use to calculate long-lived asset
carrying value of the asset to the asset’s impairment losses. However, if actual
estimated future cash flows (undiscounted results are not consistent with our estimates
and without interest charges). If the and assumptions used in estimating future
estimated future cash flows are less than cash flows and asset fair values, we may
the carrying value of the asset, we be exposed to losses that could be
calculate an impairment loss. The material.
impairment loss calculation compares the
carrying value of the asset to the asset’s
estimated fair value, which may be based
on estimated future cash flows (discounted
and with interest charges). We recognize an
impairment loss if the amount of the asset’s
carrying value exceeds the asset’s
estimated fair value. If we recognize an
impairment loss, the adjusted carrying
amount of the asset becomes its new cost
basis. For a depreciable long-lived asset,
the new cost basis will be depreciated
(amortized) over the remaining useful life of
that asset.
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