HR Block 2010 Annual Report Download - page 66

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The following methods were used to determine the fair values of our other financial instruments:
쐍Cash equivalents, accounts receivable, demand deposits, accounts payable, accrued liabilities and the current
portion of long-term debt – The carrying values reported in the balance sheet for these items approximate fair
market value due to the relative short-term nature of the respective instruments.
쐍Mortgage loans held for investment – The fair value of mortgage loans held for investment is generally
determined using a pricing model based on current market information obtained from origination data, and
bids received from time to time. The fair value of certain impaired loans held for investment is primarily based
on the appraised value of the underlying collateral less estimated selling costs.
쐍IRAs and other time deposits – The fair value is calculated based on the discounted value of contractual cash
flows.
쐍Long-term debt – The fair value of borrowings is based on rates currently available to us for obligations with
similar terms and maturities, including current market rates on our Senior Notes.
The following table presents for each hierarchy level the financial assets that are measured at fair value on both
a recurring and non-recurring basis:
Total Level 1 Level 2 Level 3
(dollars in 000s)
As of April 30, 2010:
Recurring:
Available-for-sale securities $ 31,948 $ – $ 31,948 $ –
Non-recurring:
Impaired mortgage loans held for investment 249,549 – – 249,549
$ 281,497 $ – $ 31,948 $ 249,549
As a percentage of total assets 5.4% – % 0.6% 4.8%
As of April 30, 2009:
Recurring:
Available-for-sale securities $ 43,863 $ – $ 43,863 $ –
Non-recurring:
Impaired mortgage loans held for investment 238,568 – – 238,568
$ 282,431 $ – $ 43,863 $ 238,568
As a percentage of total assets 5.3% – % 0.8% 4.5%
Available-for-sale securities are included in other assets on our consolidated balance sheets. Losses included in
earnings are reported in results from operations.
The carrying amounts and estimated fair values of our financial instruments at April 30, 2010 are as follows:
Carrying
Amount
Estimated
Fair Value
(in 000s)
Mortgage loans held for investment $ 595,405 $ 356,389
IRAs and other time deposits 442,252 441,910
Long-term debt 1,038,832 1,132,577
FHLB advances 75,000 75,084
NOTE 7: PROPERTY AND EQUIPMENT
The components of property and equipment are as follows:
As of April 30, 2010 2009
(in 000s)
Land and other non-depreciable assets $ 2,482 $ 5,353
Buildings 161,460 171,785
Computers and other equipment 488,160 469,066
Capitalized software 147,104 153,771
Leasehold improvements 199,370 187,180
Construction in process 3,902 6,209
1,002,478 993,364
Less: Accumulated depreciation and amortization (657,008) (625,075)
$ 345,470 $ 368,289
During fiscal year 2010, we received $10.3 million for tax incentives from certain government agencies related to
our corporate headquarters building, which was recorded as a reduction of original cost.
50 H&R BLOCK 2010 Form 10K