CompUSA 2015 Annual Report Download - page 55

Table of Contents
Changesinestimatesaremadewhencircumstanceswarrant.Suchchangesinestimatesandrefinementsinestimationmethodologiesarereflectedinreported
resultsofoperations;ifmaterial,theeffectsofchangesinestimatesaredisclosedinthenotestotheconsolidatedfinancialstatements.Significantestimates
and assumptions by management affect the allowance for doubtful accounts, sales return returns and allowances, inventory reserves, allowances for
cooperative advertising, vendor drop shipments, the carrying value of long‑lived assets (including goodwill and intangible assets), the carrying value,
capitalizationandamortizationofsoftwaredevelopment costs,theprovisionforincometaxesandrelateddeferred taxaccounts,certain accrued liabilities,
revenuerecognition,contingencies,sub-rentalleaseincome,litigationandrelatedlegalaccrualsandthevalueattributedtoemployeestockoptionsandother
stock‑basedawards.
Foreign Currency Translation —TheCompanyhasoperationsinnumerousforeigncountries.Thefunctionalcurrencyofeachforeigncountryisthelocal
currency.ThefinancialstatementsoftheCompany’sforeignentitiesaretranslatedintoU.S.dollars,thereportingcurrency,usingyear-endexchangeratesfor
assetsandliabilities,yeartodateaverageexchangeratesforthestatementofoperationsitemsandhistoricalratesforequityaccounts.Translationgainsor
lossesarerecordedasaseparatecomponentofshareholders’equity.
Cash — The Company considers amounts held in money market accounts and other short-term investments, including overnight bank deposits, with an
originalmaturitydateofthreemonthsorlesstobecash.Cashoverdraftsareclassifiedinaccountspayable.
Inventories —Inventoriesconsistprimarilyoffinishedgoodsandarestatedatthelowerofcostormarketvalue.Costisdeterminedbyusingthefirst-in,first-
outmethodexceptincertainlocationsinEuropeandretaillocationswhereanaveragecostisused.
Property, Plant and Equipment —Property,plantandequipmentisstatedatcost.Furniture,fixturesandequipment,includingequipmentundercapitalleases,
aredepreciatedusingthestraight-lineoracceleratedmethodovertheirestimatedusefullivesrangingfromthreetotenyears.Buildingsaredepreciatedusing
thestraight-linemethodoverestimatedusefullivesof30to50years.Leaseholdimprovementsareamortizedovertheshorteroftheusefullivesortheterm
oftherespectiveleases.
Maintenanceandrepairsarechargedtoexpenseasincurred,andimprovementsarecapitalized.Whenassetsareretiredorotherwisedisposedof,thecostand
accumulateddepreciationareremovedfromtheaccounts,andanyresultinggainorlossisreflectedintheconsolidatedstatementofoperationsintheperiod
realized.
Internal-Use Software -Internal‑usesoftwareisincludedinfixedassetsandisamortizedonastraight‑linebasisover3years.TheCompanycapitalizescosts
incurredduringtheapplicationdevelopmentstage.Costsrelatedtominorupgrades,minorenhancementsandmaintenanceactivitiesareexpensedasincurred.
Evaluation of Long-lived Assets — Long lived assets are assets used in the Company’s operations and include, definite-lived intangible assets leasehold
improvements,warehouseandretailstorefixturesandsimilarpropertyusedtogeneratesales andcashflows.Longlivedassetsaretestedfor impairment
utilizingarecoverabilitytest.Therecoverabilitytestcomparesthecarryingvalueofanassetgrouptotheundiscountedcashflowsdirectlyattributabletothe
assetgroupoverthelifeoftheprimaryasset.Iftheundiscountedcashflowsofanassetgroupislessthanthecarryingvalueoftheassetgroup,thefairvalue
oftheassetgroupisthenmeasured.Ifthefairvalueisalsodeterminedtobelessthanthecarryingvalueoftheassetgroup,theassetgroupisimpaired.Asa
resultofnegativecashflowsinitsnowdiscontinuedNATGoperationsanditsEMEAoperationsinGermany,Italy,SpainandSweden,andaforecastfor
continued use of cash in 2015, the Company conducted an evaluation of the long-lived assets in those operations and concluded that those assets were
impaired.Accordinglyanimpairmentchargeofapproximately$1.4million,pre-tax,wasrecordedduringtheyearendedDecember31,2015.In2014,NATG
operationsrecordedanimpairmentchargeof$10.0million,pre-tax,aftertheCompanyconductedanevaluationofitslong-livedassetsanddeterminedthat
thoseassetswereimpaired.
Business Combinations —TheCompanyaccountsforitsbusinesscombinationsusingtheacquisition methodof accounting. The cost of an acquisition is
measured as the aggregate of the acquisition date fair values of the assets transferred and liabilities assumed by the Company to the sellers and equity
instrumentsissued.Transactioncostsdirectlyattributabletotheacquisitionareexpensedasincurred.Identifiableassetsandliabilitiesacquiredorassumedare
measuredseparatelyattheirfairvaluesasoftheacquisitiondate.Theexcessof(i)thetotalcostsofacquisitionover(ii)thefairvalueoftheidentifiablenet
assetsoftheacquireeisrecordedasgoodwill.
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