CompUSA 2015 Annual Report Download - page 26

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 2015 the Company conducted an evaluation of
the long-lived assets in its EMEA and now
discontinuedNATGsegmentandconcludedthatan
impairmentchargeof$0.7millioneach,pre-tax,be
recorded.

In 2014 the Company conducted an evaluation of
thelong-livedassetsinitsnowdiscontinuedNorth
America Technology Products segment and
concluded that an impairment charge of $10.0
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$3.8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, 2015 would impact net income by
approximately$0.7million.

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