Netgear 2011 Annual Report Download - page 46

Table of Contents
change in the assessment of future operations. Determination of recoverability is based on an estimate of undiscounted future cash flows
resulting from the use of the asset and its eventual disposition. Measurement of an impairment loss for long-lived assets that management
expects to hold and use is based on the fair value of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or
fair value less costs to sell. The carrying value of the asset is reviewed on a regular basis for the existence of facts, both internal and external,
that may suggest impairment.
During the years ended December 31, 2011, 2010 and 2009, there were no events or changes in circumstances that indicated the carrying
amount of our long-lived assets may not be recoverable from their undiscounted cash flows. Consequently, we did not perform an impairment
test or record an impairment of our long-lived assets during those periods.
We will continue to evaluate the carrying value of our long-lived assets and if we determine in the future that there is a potential further
impairment, we may be required to record additional charges to earnings which could affect our financial results.
Income Taxes
We account for income taxes under an asset and liability approach. Under this method, income tax expense is recognized for the amount of
taxes payable or refundable for the current year. In addition, deferred tax assets and liabilities are recognized for the expected future tax
consequences of temporary differences resulting from different treatments for tax versus accounting of certain items, such as accruals and
allowances not currently deductible for tax purposes. These differences result in deferred tax assets and liabilities, which are included within the
consolidated balance sheet. We must then assess the likelihood that our deferred tax assets will be recovered from future taxable income and to
the extent we believe that recovery is not more likely than not, we must establish a valuation allowance. As of December 31, 2011, we believe
that all of our deferred tax assets are recoverable; however, if there were a change in our ability to recover our deferred tax assets, we would be
required to take a charge in the period in which we determined that recovery was not more likely than not.
Uncertain tax provisions are recognized under guidance that provides that a company should use a more-likely-than-not recognition
threshold based on the technical merits of the income tax position taken. Income tax positions that meet the more-likely-than-not recognition
threshold should be measured in order to determine the tax benefit to be recognized in the financial statements. We include interest expense and
penalties related to uncertain tax positions as additional tax expense.
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