Best Buy 2012 Annual Report Download - page 70

$ in millions, except per share amounts or as otherwise noted
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Restricted Assets
Restricted cash and investments in debt securities totaled $461 and $490, at March 3, 2012, and February 26, 2011,
respectively, and are included in Other current assets or Equity and Other Investments in our Consolidated Balance Sheets.
Such balances are pledged as collateral or restricted to use for vendor payables, general liability insurance, workers'
compensation insurance and warranty programs.
Property and Equipment
Property and equipment are recorded at cost. We compute depreciation using the straight-line method over the estimated useful
lives of the assets. Leasehold improvements are depreciated over the shorter of their estimated useful lives or the period from
the date the assets are placed in service to the end of the initial lease term. Leasehold improvements made significantly after the
initial lease term are depreciated over the shorter of their estimated useful lives or the remaining lease term, including renewal
periods, if reasonably assured. Accelerated depreciation methods are generally used for income tax purposes.
When property is retired or otherwise disposed of, the cost and accumulated depreciation are removed from our Consolidated
Balance Sheets and any resulting gain or loss is reflected in our Consolidated Statements of Earnings.
Repairs and maintenance costs are charged directly to expense as incurred. Major renewals or replacements that substantially
extend the useful life of an asset are capitalized and depreciated.
Costs associated with the acquisition or development of software for internal use are capitalized and amortized over the
expected useful life of the software, from three to seven years. A subsequent addition, modification or upgrade to internal-use
software is capitalized to the extent that it enhances the software's functionality or extends its useful life. Capitalized software
is included in fixtures and equipment. Software maintenance and training costs are expensed in the period incurred.
Property under capital lease is comprised of buildings and equipment used in our retail operations and corporate support
functions. The related depreciation for capital lease assets is included in depreciation expense. The carrying value of property
under capital lease was $69 and $74 at March 3, 2012, and February 26, 2011, respectively, net of accumulated depreciation of
$60 and $45, respectively.
Estimated useful lives by major asset category are as follows:
Asset Life (in years)
Buildings 25-50
Leasehold improvements 3-25
Fixtures and equipment 3-20
Property under capital lease 2-20
Impairment of Long-Lived Assets and Costs Associated With Exit Activities
Long-lived assets, such as property and equipment, are evaluated for impairment whenever events or changes in circumstances
indicate the carrying value of an asset may not be recoverable. Factors considered important that could result in an impairment
review include, but are not limited to, significant underperformance relative to historical or planned operating results,
significant changes in the manner of use of the assets or significant changes in our business strategies. An impairment loss is
recognized when the estimated undiscounted cash flows expected to result from the use of the asset plus net proceeds expected
from disposition of the asset (if any) are less than the carrying value of the asset. When an impairment loss is recognized, the
carrying amount of the asset is reduced to its estimated fair value based on quoted market prices or other valuation techniques
(e.g., discounted cash flow analysis).
When reviewing long-lived assets for impairment, we group long-lived assets with other assets and liabilities at the lowest level
for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. For example, long-
lived assets deployed at store locations are reviewed for impairment at the individual store level, which involves comparing the
carrying value of all land, buildings, leasehold improvements, fixtures and equipment located at each store to the net cash flow
projections for each store. In addition, we conduct separate impairment reviews at other levels as appropriate, for example to
evaluate potential impairment of assets shared by several areas of operations, such as information technology systems.