Kimberly-Clark 2010 Annual Report Download - page 44

KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Accounting Policies
Basis of Presentation
The Consolidated Financial Statements present the accounts of Kimberly-Clark Corporation and all
subsidiaries in which it has a controlling financial interest as if they were a single economic entity in conformity
with accounting principles generally accepted in the United States of America (“GAAP”). All intercompany
transactions and accounts are eliminated in consolidation. The terms “Corporation,” “Kimberly-Clark,” “we,”
“our,” and “us” refer to Kimberly-Clark Corporation and all subsidiaries in which it has a controlling financial
interest.
Use of Estimates
The preparation of financial statements requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of
net sales and expenses during the reporting periods. Actual results could differ from these estimates, and changes
in these estimates are recorded when known. Estimates are used in accounting for, among other things, consumer
and trade promotion and rebate accruals, pension and other post-employment benefits, useful lives for
depreciation and amortization, future cash flows associated with impairment testing for goodwill and long-lived
assets, determination of the primary beneficiary of variable interest entities, deferred tax assets and potential
income tax assessments, and loss contingencies.
Cash Equivalents
Cash equivalents are short-term investments with an original maturity date of three months or less.
Inventories and Distribution Costs
For financial reporting purposes, most U.S. inventories are valued at the lower of cost, using the Last-In,
First-Out (LIFO) method, or market. The balance of the U.S. inventories and inventories of consolidated
operations outside the U.S. are valued at the lower of cost, using either the First-In, First-Out (FIFO) or
weighted-average cost methods, or market. Distribution costs are classified as cost of products sold.
Available-for-Sale Securities
Available-for-sale securities are primarily exchange-traded equity funds and are carried at market value. At
December 31, 2010 and 2009, securities of $15 million and $13 million, respectively, that are not expected to be
liquidated in the next 12 months, were classified as other assets. In addition, at December 31, 2009, securities of
$6 million expected to be sold within one year were included in other current assets. These securities were sold in
2010 for an amount that approximated their carrying value. Unrealized holding gains or losses on these securities
are recorded in other comprehensive income until realized. No significant gains or losses were recognized in
income for any of the three years ended December 31, 2010.
Property and Depreciation
For financial reporting purposes, property, plant and equipment are stated at cost and are depreciated
principally on the straight-line method. Buildings are depreciated over their estimated useful lives, primarily 40
years. Machinery and equipment are depreciated over their estimated useful lives, primarily ranging from 16 to
20 years. For income tax purposes, accelerated methods of depreciation are used. Purchases of computer software
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