Cracker Barrel 2012 Annual Report Download - page 26

RECENT ACCOUNTING PRONOUNCEMENTS
ADOPTED AND NOT YET ADOPTED
See Note 2 to the accompanying Consolidated Financial
Statements for a discussion of recent accounting guidance
adopted and not yet adopted. None of the accounting
guidance discussed in Note 2 either had or is expected to have
a signicant impact on our consolidated nancial statements.
CRITICAL ACCOUNTING ESTIMATES
We prepare our Consolidated Financial Statements in
conformity with GAAP. e preparation of these nancial
statements requires us to make estimates and assumptions
about future events and apply judgments that aect the
reported amounts of assets, liabilities, revenue, expenses and
related disclosures. We base our estimates and judgments on
historical experience, current trends, outside advice from
parties believed to be experts in such maers and on various
other assumptions that are believed to be reasonable under
the circumstances, the results of which form the basis for
making judgments about the carrying value of assets and
liabilities that are not readily apparent from other sources.
However, because future events and their eects cannot be
determined with certainty, actual results could dier from
those assumptions and estimates, and such dierences could
be material.
Our signicant accounting policies are discussed in Note 2
to the Consolidated Financial Statements. Judgments and
uncertainties aecting the application of those policies may
result in materially dierent amounts being reported under
dierent conditions or using dierent assumptions. Critical
accounting estimates are those that:
• managementbelievesaremostimportanttotheaccurate
portrayal of both our nancial condition and operating
results and
• requiremanagement’smostdicult,subjectiveorcomplex
judgments, oen as a result of the need to make estimates
about the eect of maers that are inherently uncertain.
We consider the following accounting estimates to be most
critical in understanding the judgments that are involved in
preparing our Consolidated Financial Statements:
• ImpairmentofLong-LivedAssetsandProvisionfor
Asset Dispositions
• InsuranceReserves
• RetailInventoryValuation
• TaxProvision
• Share-BasedCompensation
Management has reviewed these critical accounting
estimates and related disclosures with the Audit Commiee
of our Board of Directors.
Impairment of Long-Lived Assets and
Provision for Asset Dispositions
We assess the impairment of long-lived assets whenever
events or changes in circumstances indicate that the carrying
value of an asset may not be recoverable. Recoverability of
assets is measured by comparing the carrying value of the
asset to the undiscounted future cash ows expected to be
generated by the asset. If the total expected future cash ows
are less than the carrying amount of the asset, the carrying
value is wrien down, for an asset to be held and used, to the
estimated fair value or, for an asset to be disposed of, to the
fair value, net of estimated costs of disposal. Any loss resulting
from impairment is recognized by a charge to income.
Judgments and estimates that we make related to the expected
useful lives of long-lived assets and future cash ows are
aected by factors such as changes in economic conditions
and changes in operating performance. e accuracy of such
provisions can vary materially from original estimates and
management regularly monitors the adequacy of the
provisions until nal disposition occurs.
We have not made any material changes in our methodol-
ogy for assessing impairments during the past three years and
we do not believe that there is a reasonable likelihood that
there will be a material change in the estimates or assump-
tions used by us to assess impairment on long-lived assets.
However, if actual results are not consistent with our
estimates and assumptions used in estimating future cash
ows and fair values of long-lived assets, we may be exposed
to losses that could be material.
In 2011 and 2010, we incurred impairment charges related
to our stores. In 2011, we also incurred impairment charges
related to a corporate property held for sale. For a more
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