Best Buy 2015 Annual Report Download - page 72

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Table of Contents
65
entailed allocating the fair values determined from step one to the fair value of all recognized and appropriately unrecognized
assets and liabilities to determine the implied fair value of goodwill. In both cases, this analysis led to the conclusion that the
goodwill had no value, and therefore we recorded full impairment of the goodwill associated with Best Buy Canada ($611
million) and Five Star ($208 million). The Canada goodwill impairment is included in continuing operations in our
International segment, and the Five Star goodwill impairment is included in discontinued operations.
Tradenames and Customer Relationships
We include our tradenames and customer relationships within intangibles, net in our Consolidated Balance Sheets. We have an
indefinite-lived tradename related to Pacific Sales included within our Domestic segment. We also have an indefinite-lived
tradename related to Future Shop included within our International segment.
Our valuation of identifiable intangible assets acquired is based on information and assumptions available to us at the time of
acquisition, using income and market approaches to determine fair value. We do not amortize our indefinite-lived tradenames,
but test for impairment annually, or when indications of potential impairment exist. We utilize the relief from royalty method to
determine the fair value of each of our indefinite-lived tradenames. If the carrying value exceeds the fair value, we recognize an
impairment loss in an amount equal to the excess. No material impairments were identified during fiscal 2015.
The changes in the carrying amount of goodwill and indefinite-lived tradenames by segment were as follows in fiscal 2015,
2014 and 2013 (11-month) ($ in millions):
Goodwill Indefinite-Lived Tradenames
Domestic International Total Domestic International Total
Balances at March 3, 2012 $ 516 $ 819 $ 1,335 $ 19 $ 111 $ 130
Acquisitions(1) 15 — 15 — — —
Impairments (3) (819)(822) — — —
Changes in foreign currency exchange
rates — — — — 1 1
Balances at February 2, 2013 528 — 528 19 112 131
Sale of business(2) (103) — (103) — (22)(22)
Impairments — — — — (4)(4)
Changes in foreign currency exchange
rates — — — — (4)(4)
Balances at February 1, 2014 425 — 425 19 82 101
Impairments — — — (1) — (1)
Sale of business(3) — — — — (37)(37)
Changes in foreign currency exchange
rates — — — — (6)(6)
Balances at January 31, 2015 $ 425 $ — $ 425 $ 18 $ 39 $ 57
(1) Represents goodwill acquired, primarily as a result of an acquisition made by mindSHIFT in fiscal 2013 (11-month).
(2) Represents goodwill written-off as a result of the sale of mindSHIFT in fiscal 2014 and indefinite-lived tradenames written off as a result of the sale of
Best Buy Europe in fiscal 2014.
(3) Represents the Five Star indefinite-lived tradenames classified as held for sale at January 31, 2015.
The following table provides the gross carrying amount of goodwill and cumulative goodwill impairment losses ($ in millions):
January 31, 2015 February 1, 2014
Gross Carrying
Amount(1) Cumulative
Impairment(1) Gross Carrying
Amount Cumulative
Impairment
Goodwill $ 1,100 $ (675) $ 1,308 $ (883)
(1) Excludes the gross carrying amount and cumulative impairment related to Five Star, which was held for sale at the end of fiscal 2015. The sale of Five
Star was completed on February 13, 2015.