CompUSA 2012 Annual Report Download - page 24

Table of Contents
Accounting policy Assumptions and uncertainties Quantification and analysis of effect on actual
results if estimates differ materially
Long
-lived Assets. Management exercises
judgment in evaluating our long
-lived assets
for impairment and in their depreciation and
amortization methods and lives. We believe
we will generate sufficient undiscounted
cash flow to more than recover the
investments made in property, plant and
equipment.
The impairment analysis for long lived
assets requires management to make
judgments about useful lives and to estimate
fair values of long lived assets. It may also
require us to estimate future cash flows of
related assets using discounted cash flow
model Our estimates of future cash flows
involve assumptions concerning future
operating performance and economic
conditions. While we believe that our
estimates of future cash flows are
reasonable, different assumptions regarding
such cash flows could materially affect our
evaluations.
We have not made any material changes to our
long lived assets policy in the past three years
and we do not anticipate making any material
changes to this policy in the future.
We do not believe it is reasonably likely that the
estimates and assumptions used to determine
long lived asset impairment will vary materially
in the future. However if our estimates are
materially different than our actual experience
we could have a material gain or loss adjustment.
A change of 10% in the carrying value of our
long lived assets would impact net income by
approximately $6.3 million.
Vendor Accruals. Our contractual
agreements with certain suppliers provide us
with funding or allowances for costs such as
price protection, markdowns and advertising
as well funds or allowances for purchasing
volumes.
Generally, allowances received as a
reimbursement of identifiable costs are
recorded as an expense reduction when the
cost is incurred. Sales related allowances are
generally determined by our level of
purchases of product and are deferred and
recorded as a reduction of inventory
carrying value and are ultimately included as
a reduction of cost of goods when inventory
is sold.
Management makes assumptions and
exercises judgment in estimating period end
funding and allowances earned under our
various agreements. Estimates are developed
based on the terms of our vendor agreements
and using existing expenditures for which
funding is available, determining products
whose market price would indicate coverage
for markdown or price protection is
available and estimating the level of our
performance under agreements that provide
funds or allowances for purchasing volumes.
Estimates of funding or allowances for
purchasing volume will include projections
of annual purchases which are developed
using current actual purchase data and
historical purchase trends. Accruals in
interim periods could be materially different
if actual purchase volumes differ from
projections.
We have not made any material changes to our
vendor accrual policy in the past three years nor
do we anticipate making any material changes to
this policy in the future.
If actual results are different from the projections
used we could have a material gain or loss
adjustment.
A change of 10% in our vendor accruals at
December 31, 2012 would impact net income by
approximately $1.6 million.
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