CompUSA 2014 Annual Report Download - page 29

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Table of Contents
Long
-lived Assets.
Management exercises
judgment in evaluating our long
-
lived assets
for impairment and in their depreciation and
amortization methods and lives including
evaluating undiscounted cash flows.
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.
In 2014 the Company conducted an
evaluation of the long-lived assets in its
North
America Technology Products segment and
concluded that an impairment charge of $9.5
million, pre-tax, be recorded.
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 $4.1 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 as 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, 2014 would impact net income
by approximately $1.4 million.