Cash America 2014 Annual Report Download - page 58

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The Company is considered to be at risk for a future impairment of its goodwill in the event of a decline in
general economic, market or business conditions or any significant unfavorable changes in the Company's
forecasted revenue, expenses, cash flows, weighted-average cost of capital and/or market transaction multiples. The
Company will continue to monitor for events and circumstances that could negatively impact the key assumptions
in determining the fair value of the retail services reporting unit.
Long-Lived Assets 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 intangible assets subject to amortization 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.
Equity Securities
The Company accounts for its marketable and non-marketable equity securities in accordance with ASC
323 and ASC 325, respectively. The Company has marketable equity securities that are held in its Nonqualified
Savings Plan, marketable equity securities for its retained shares of Enova common stock, and non-marketable
equity securities, each as described further below.
The Company retained approximately 20% of the outstanding shares of Enova common stock after the
Enova Spin-off. The shares of Enova common stock held by the Company are classified as available-for-sale and
unrecognized gains and losses, net of tax, are recorded in “Accumulated other comprehensive income (loss)” in the
consolidated statements of equity. Enova was in the process of registering these securities with the SEC as of
December 31, 2014. Since these securities are not yet registered with the SEC, the Company has valued this
investment based on the market determined stock price of Enova on December 31, 2014, less an adjustment factor
due to the unregistered nature of the shares.
The Company evaluates marketable and non-marketable equity securities for impairment if circumstances
arise that indicate that an impairment may exist. Non-marketable equity securities are held in “Other assets” in the
Company’s consolidated balance sheets. If an impairment of an equity security is determined to be other than
temporary, the cost basis of the investment will be reduced and the resulting loss recognized in net income in the
period the other-than-temporary-impairment is identified.
Income Taxes
As part of the process of preparing its consolidated financial statements, the Company is required to
estimate income taxes in each of the jurisdictions in which it operates. This process involves estimating the actual
current tax expense together with assessing temporary differences in recognition of income for tax and accounting
purposes. These differences result in deferred tax assets and liabilities and are included within the consolidated
balance sheets. Management must then assess the likelihood that the deferred tax assets will be recovered from
future taxable income and, to the extent it believes that recovery is not likely, it must establish a valuation
allowance. An expense or benefit is included within the tax provision in the consolidated statement of income for
any increase or decrease in the valuation allowance for a given period.
The Company performs an evaluation of the recoverability of its deferred tax assets on a quarterly basis.
The Company establishes a valuation allowance if it is more-likely-than-not (greater than 50 percent) that all or
some portion of the deferred tax asset will not be realized. The Company analyzes several factors, including the
nature and frequency of operating losses, the Company’s carryforward period for any losses, the reversal of future