Cracker Barrel 2013 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 assump-
tions 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 methodology
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 assumptions
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.
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