Cash America 2011 Annual Report Download - page 121

Fácil, are expected to be deductible for tax purposes.
Long-Lived Assets Other Than Goodwill and Other Intangible Assets
An evaluation of the recoverability of property and equipment and intangible assets subject to amortization is
performed whenever the facts and circumstances indicate that the carrying value may be impaired. An impairment loss
is recognized if the future undiscounted cash flows associated with the asset and the estimated fair value of the asset
are less than the asset’s corresponding carrying value. The amount of the impairment loss, if any, is the excess of the
asset’s carrying value over its estimated fair value.
The Company amortizes finite-lived intangible assets with an estimable life on the basis of their expected
periods of benefit, generally three to 10 years. The costs of start-up activities and organization costs are charged to
expense as incurred.
Income Taxes
The provision for income taxes is based on income before income taxes as reported for financial statement
purposes. Deferred income taxes are provided for in accordance with the assets and liability method of accounting for
income taxes in order to recognize the tax effects of temporary differences between financial statement and income tax
accounting. Domestic income taxes have not been provided on undistributed earnings of foreign subsidiaries because
it is the Company’s intent to reinvest these earnings in the business activities of the foreign subsidiaries for the
foreseeable future.
The Company accounts for uncertainty in income taxes in accordance with ASC 740-10-25, Accounting for
Uncertainty in Income Taxes (“ASC 740-10-25”). ASC 740-10-25 requires that a more-likely-than-not threshold be
met before the benefit of a tax position may be recognized in the consolidated financial statements and prescribes how
such benefit should be measured. It also provides guidance on recognition adjustment, classification, accrual of interest
and penalties, accounting in interim periods, disclosure and transition. See Note 12.
It is the Company’s policy to classify interest and penalties on income tax liabilities as interest expense and
administrative expense, respectively.
Hedging and Derivatives Activity
As a policy, the Company does not engage in speculative or leveraged transactions, nor does it hold or issue
financial instruments for trading purposes. The Company does periodically use derivative financial instruments, such
as interest rate cap agreements and foreign currency forward contracts. The Company uses interest rate cap
agreements for the purpose of managing interest rate exposures that exist from ongoing business operations. During
the year ended December 31, 2009, the Company entered into an interest rate cap agreement that has been determined
to be a perfectly effective cash flow hedge, pursuant to ASC 815-20-25, Derivatives and Hedging – Recognition
(“ASC 815-20-25”), at inception and on an ongoing basis. The fair value of this interest rate cap agreement is
recognized in “Other assets” in the accompanying consolidated balance sheets and changes in fair value are recognized
in “Accumulated other comprehensive income (loss)” in the accompanying consolidated statements of equity. The
Company uses foreign currency forward contracts to minimize the effects of foreign currency risk in the United
Kingdom, Australia and, through September 30, 2011, in Mexico. See Note 16. The Company may periodically enter
into forward sale contracts with a major gold bullion bank to sell refined gold that is acquired in the normal course of
business from the Company’s liquidation of forfeited gold merchandise. These contracts are not accounted for as
derivatives because they meet the criteria for the normal purchases and normal sales scope exception in ASC 815-20-
25.
CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
90
All of the amounts of goodwill recorded in the Company’s acquisitions, except for the acquisition of Prenda