Cardinal Health 2010 Annual Report Download - page 73

assets which are depreciated over the terms of their respective leases. We use the following range of useful live
s
f
or our property and equipment categories: buildings and improvements—1 to
5
0 years; machinery an
d
equipment—2 to 20 years; furniture and fixtures—3 to 10 years.
T
h
e
f
o
ll
ow
i
n
g
ta
bl
es
h
ows
d
eprec
i
at
i
on expense
f
or
fi
sca
l
2010, 2009 an
d
2008:
F
i
sca
lY
ea
rEn
ded
J
une
30,
(
in millions
)
2010
2009
2008
De
p
reciation ex
p
ense
...................................................
$
233.4
$
206.9
$
201.
6
W
h
en certa
i
n events or c
h
an
g
es
i
n operat
i
n
g
con
di
t
i
ons occur, an
i
mpa
i
rment assessment ma
yb
e per
f
orme
d
o
nt
h
e recovera
bili
t
y
o
f
t
h
e carr
yi
n
g
amounts. Repa
i
rs an
d
ma
i
ntenance expen
di
tures are expense
d
as
i
ncurre
d.
Interest on
l
on
g
-term pro
j
ects
i
s cap
i
ta
li
ze
d
us
i
n
g
a rate t
h
at approx
i
mates t
h
ewe
igh
te
d
avera
g
e
i
nterest rate on
lon
g
-term obli
g
ations, which was 5.5% at June 30, 2010. The amount of capitalized interest was immaterial for
a
ll fi
sca
ly
ears presente
d
.
Goo
d
wi
ll
an
d
Ot
h
er Intangi
bl
es
.
Purc
h
ase
d
goo
d
w
ill
an
di
ntang
ibl
e assets w
i
t
hi
n
d
e
fi
n
i
te
li
ves are no
t
amort
i
ze
d
,
b
ut
i
nstea
d
are teste
df
or
i
mpa
i
rment annua
ll
yorw
h
en
i
n
di
cators o
fi
mpa
i
rment ex
i
st. Intang
ibl
e
assets w
i
t
hfi
n
i
te
li
ves—pr
i
mar
il
y customer re
l
at
i
ons
hi
ps an
d
patents an
d
tra
d
emar
k
s—cont
i
nue to
b
e amort
i
ze
d
o
ver t
h
e
i
r use
f
u
lli
ves. Impa
i
rment test
i
ng
i
nvo
l
ves a compar
i
son o
f
est
i
mate
df
a
i
rva
l
ue to t
h
e respect
i
v
e
carry
i
ng amount. I
f
est
i
mate
df
a
i
rva
l
ue excee
d
st
h
e carry
i
ng amount, t
h
en no
i
mpa
i
rment ex
i
sts. I
f
t
h
e carry
i
n
g
amount excee
d
st
h
e est
i
mate
df
a
i
rva
l
ue, t
h
en a secon
d
step
i
s per
f
orme
d
to
d
eterm
i
ne t
h
e amount o
fi
mpa
i
rment,
w
hi
c
h
wou
ld b
e recor
d
e
d
as an expense to our resu
l
ts o
f
operat
i
ons
.
A
pplication of goodwill impairment testing involves judgment, including but not limited to, th
e
identification of reporting units and estimating the fair value of each reporting unit. A reporting unit is defined a
s
an operating segment or one level below an operating segment. In fiscal 2010, we identified three reporting
units: Pharmaceutical segment excluding our nuclear and pharmacy services division, Medical segment an
d
nuclear and pharmacy services division. Fair values can be determined using market, income or cost-based
approaches. Our determination of estimated fair value of the reporting units is based on a combination of income-
based and market-based approaches. Under the market-based approach we determine fair value by comparing ou
r
r
eporting units to similar businesses, or guideline companies whose securities are actively traded in public
markets. Under the income-a
pp
roach, we use a discounted cash flow model in which cash flows antici
p
ated ove
r
several periods, plus a terminal value at the end of that time horizon, are discounted to their present value usin
g
an appropriate rate of return. To further confirm the fair value, we compare the aggregate fair value of our
r
eporting units to our market capitalization. The use of alternate estimates and assumptions or changes in th
e
industry or peer groups could materially affect the determination of fair value for each reporting unit an
d
p
otentially result in goodwill impairment
.
We per
f
orme
d
annua
li
mpa
i
rment test
i
n
gi
n
fi
sca
l
2010 an
d
conc
l
u
d
e
d
t
h
at t
h
ere were no
i
mpa
i
rments o
f
g
oo
d
w
ill
as t
h
e
f
a
i
rva
l
ue o
f
eac
h
report
i
n
g
un
i
t excee
d
e
di
ts carr
yi
n
g
va
l
ue. Due to t
h
eSp
i
n-O
ff
an
d
r
eor
g
an
i
zat
i
on o
f
t
h
e report
i
n
g
un
i
ts,
g
oo
d
w
ill
was a
l
so teste
df
or
i
mpa
i
rment
i
nt
h
e
fi
rst quarter o
ffi
sca
l
2010. Base
d
on t
hi
s ana
ly
s
i
st
h
ere was no
i
mpa
i
rment. We a
l
so per
f
orme
d
annua
li
mpa
i
rment test
i
n
gi
n
fi
sca
l
2009 and 2008 and determined there was no impairment. See Note
6
for additional information re
g
ardin
g
g
oo
d
w
ill
an
d
ot
h
er
i
ntan
gibl
e assets
.
I
ncome
T
axes
.
We account
f
or
i
ncome taxes us
i
ng t
h
e asset an
dli
a
bili
ty met
h
o
d
.T
h
e asset an
dli
a
bili
t
y
met
h
o
d
requ
i
res recogn
i
t
i
on o
fd
e
f
erre
d
tax assets an
dli
a
bili
t
i
es
f
or expecte
df
uture tax consequences o
f
temporary
diff
erences t
h
at current
l
yex
i
st
b
etween t
h
e tax
b
ases an
dfi
nanc
i
a
l
report
i
ng
b
ases o
f
our assets an
d
li
a
bili
t
i
es. De
f
erre
d
tax assets an
dli
a
bili
t
i
es are measure
d
us
i
ng enacte
d
tax rates
i
nt
h
e respect
i
ve
j
ur
i
s
di
ct
i
ons
in
w
hi
c
h
we operate. De
f
erre
d
taxes are not prov
id
e
d
on t
h
e unrem
i
tte
d
earn
i
ngs o
f
su
b
s
idi
ar
i
es outs
id
eo
f
t
he
U
.S. w
h
en
i
t
i
s expecte
d
t
h
at t
h
ese earn
i
ngs are permanent
l
yre
i
nveste
d.
4
7