Kimberly-Clark 2007 Annual Report Download - page 66

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KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Investments in Equity Companies
Investments in companies over which the Corporation has the ability to exercise significant influence and
that, in general, are at least 20 percent-owned are stated at cost plus equity in undistributed net income. These
investments are evaluated for impairment in accordance with the requirements of Accounting Principles Board
(“APB”) Opinion No. 18, The Equity Method of Accounting for Investments in Common Stock. An impairment
loss would be recorded whenever a decline in value of an equity investment below its carrying amount is
determined to be other than temporary. In judging “other than temporary,” the Corporation would consider the
length of time and extent to which the fair value of the equity company investment has been less than the
carrying amount, the near-term and longer-term operating and financial prospects of the equity company, and its
longer-term intent of retaining the investment in the equity company.
Revenue Recognition
Sales revenue for the Corporation and its reportable business segments is recognized at the time of product
shipment or delivery, depending on when title passes, to unaffiliated customers, and when all of the following
have occurred: a firm sales agreement is in place, pricing is fixed or determinable, and collection is reasonably
assured. Sales are reported net of returns, consumer and trade promotions, rebates and freight allowed. Taxes
imposed by governmental authorities on the Corporation’s revenue-producing activities with customers, such as
sales taxes and value added taxes, are excluded from net sales.
Sales Incentives and Trade Promotion Allowances
The cost of promotion activities provided to customers is classified as a reduction in sales revenue. In
addition, the estimated redemption value of consumer coupons is recorded at the time the coupons are issued and
classified as a reduction in sales revenue.
Advertising Expense
Advertising costs are expensed in the year the related advertisement is first presented by the media. For
interim reporting purposes, advertising expenses are charged to operations as a percentage of sales based on
estimated sales and related advertising expense for the full year.
Research Expense
Research and development costs are charged to expense as incurred.
Environmental Expenditures
Environmental expenditures related to current operations that qualify as property, plant and equipment or
which substantially increase the economic value or extend the useful life of an asset are capitalized, and all other
environmental expenditures are expensed as incurred. Liabilities are recorded when environmental assessments
and/or remedial efforts are probable and the costs can be reasonably estimated. Generally, the timing of these
accruals coincides with completion of a feasibility study or a commitment to a formal plan of action. At
environmental sites in which more than one potentially responsible party has been identified, a liability is
recorded for the estimated allocable share of costs related to the Corporation’s involvement with the site as well
as an estimated allocable share of costs related to the involvement of insolvent or unidentified parties. At
environmental sites in which the Corporation is the only responsible party, a liability for the total estimated costs
of remediation is recorded. Liabilities for future expenditures for environmental remediation obligations are not
discounted and do not reflect any anticipated recoveries from insurers.
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