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DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Construction Allowances – All of the Company’s store locations are leased. The Company may receive
reimbursement from a landlord for some of the cost of the structure, subject to satisfactory fulfillment
of applicable lease provisions. These reimbursements may be referred to as tenant allowances,
construction allowances or landlord reimbursements (‘‘construction allowances’’).
The Company’s accounting for construction allowances differs if the Company is deemed to be the
owner of the asset during the construction period. Some of the Company’s leases have a cap on the
construction allowance, which places the Company at risk for cost overruns and causes the Company to
be deemed the owner during the construction period. In cases where the Company is deemed to be the
owner during the construction period, a sale and leaseback of the asset occurs when construction of the
asset is complete and the lease term begins, if relevant sale-leaseback accounting criteria are met. Any
gain or loss from the transaction is included within deferred revenue and other liabilities on the
Consolidated Balance Sheets and deferred and amortized as rent expense on a straight-line basis over
the term of the lease. The Company reports the amount of cash received for the construction
allowance as construction allowance receipts within the financing activities section of its Consolidated
Statements of Cash Flows when such allowances are received prior to completion of the sale-leaseback
transaction. The Company reports the amount of cash received from construction allowances as
proceeds from sale leaseback transactions within the investing activities section of its Consolidated
Statements of Cash Flows when such amounts are received after the sale-leaseback accounting criteria
have been achieved.
In instances where the Company is not deemed to be the owner during the construction period,
reimbursement from a landlord for tenant improvements is classified as an incentive and included
within deferred revenue and other liabilities on the Consolidated Balance Sheets. The deferred rent
credit is amortized as rent expense on a straight-line basis over the term of the lease. Landlord
reimbursements from these transactions are included in cash flows from operating activities as a change
in deferred construction allowances.
Recently Issued Accounting Pronouncements – In September 2011, the Financial Accounting Standards
Board (‘‘FASB’’) issued Accounting Standards Update (‘‘ASU’’) 2011-08, ‘‘Testing Goodwill for
Impairment.’’ This update amended the procedures surrounding goodwill impairment testing to permit
an entity to first assess qualitative factors to determine whether it is more likely than not that the fair
value of a reporting unit is less than its carrying amount as a basis for determining whether it is
necessary to perform the two-step goodwill impairment test described in Accounting Standards
Codification (‘‘ASC’’) 350, ‘‘Intangibles — Goodwill and Other.’’ ASU 2011-08 is effective for annual and
interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. The
Company will adopt ASU 2011-08 during the first quarter of 2012. The adoption of this guidance will
not have a significant impact on the Company’s consolidated financial statements.
In June 2011, the FASB issued ASU 2011-05, ‘‘Presentation of Comprehensive Income.’’ This update
amended the presentation options in ASC 220, ‘‘Comprehensive Income,’’ to provide an entity the
option to present the total of comprehensive income, the components of net income, and the
components of other comprehensive income either in a single continuous statement of comprehensive
income or in two separate but consecutive statements. Additionally, this update requires disclosure of
reclassification adjustments for items that are reclassified from other comprehensive income to net
income on the face of the financial statements. In December 2011, the FASB subsequently issued ASU
2011-12, ‘‘Comprehensive Income — Deferral of the Effective Date for Amendments to the Presentation of
Reclassifications of Items Out of Accumulated Other Comprehensive Income,’’ which indefinitely deferred
the presentation requirements of reclassification adjustments within ASU 2011-05. The Company will
adopt ASU 2011-05 and ASU 2011-12 during the first quarter of 2012. The adoption of this guidance
Dick’s Sporting Goods, Inc. 2011 Annual Report 59