Office Depot 2011 Annual Report Download - page 220

The Company amortizes the cost of its intangible assets with definite useful lives over such estimated useful lives. These
lives are reviewed at least annually to determine whether events and circumstances warrant a revision. Useful lives are as
follows:
Revenue is recognized at the point of sale for retail transactions and at the time of successful delivery for contract, catalog
and internet sales. Sales taxes collected are not included in reported sales. The Company does not charge shipping and
handling costs to its customers; such costs are included within selling, administrative and general expenses within the
consolidated statements of income and amounted to $105,389, $101,803 and $ 93,002 in 2011, 2010 (unaudited) and 2009
(unaudited), respectively.
12
Years
Customer list 5
Non-com
p
ete a
g
reement 10
i.
P
rovisions
—
Provisions are recognized for current obligations that arise from a past event, that are probable to result in the
use of economic resources, and that can be reasonabl
y
estimated.
j
.
D
irect employee benefits
—
Direct employee benefits are calculated based on the services rendered by employees,
considering their most recent salaries. The liability is recognized as it accrues. These benefits include mainly statutory
em
p
lo
y
ee
p
rofit sharin
g
(“PTU”)
p
a
y
able, com
p
ensated absences, such as vacation and vacation
p
remiums, and incentives.
k.
E
mployee benefits from termination, retirement and othe
r
—
Liabilities from seniority premiums and, severance payments
are recognized as they accrue and are calculated by independent actuaries based on te projected unit credit method using
nominal interest rates.
l. Statutory employee profit sharing (PTU)
—
PTU is recorded in the results of the year in which it is incurred and presented
under other income and expenses in the accompanying consolidated statements of income. Deferred PTU is derived from
temporary differences that result from comparing the accounting and tax bases of assets and liabilities and is recognized
only when it can be reasonably assumed that such difference will generate a liability or benefit, and there is no indication
that circumstances will chan
g
e in such a wa
y
that the liabilities will not be
p
aid or benefits will not be realized.
m.
I
ncome taxes
—
Income tax (“ISR”) and the Business Flat Tax (“IETU”) are recorded in the results of the year they are
incurred. To recognize deferred income taxes, based on its financial projections, the Company determines whether it
expects to incur ISR or IETU and, accordingly, recognizes deferred taxes based on that expectation. Deferred taxes are
calculated by applying the corresponding tax rate to temporary differences resulting from comparing the accounting and
tax bases of assets and liabilities and including, if any, future benefits from tax loss carryforwards and certain tax credits.
Deferred tax assets are recorded onl
y
when there is a hi
g
h
p
robabilit
y
of recover
y
.
n.
F
oreign currency transactions
—
Foreign currency transactions are recorded at the applicable exchange rate in effect at the
transaction date. Monetary assets and liabilities denominated in foreign currency are translated into functional currency
amounts at the applicable exchange rate in effect at the balance sheet date. Exchange fluctuations are recorded as a
com
p
onent of net com
p
rehensive financin
g
cost in the consolidated statements of income.
o.
R
evenue recognition
—
Revenues are recognized in the period in which the risks and rewards of ownership of the
inventories are transferred to the customers, which generally coincides with the delivery of products to customers in
satisfaction of orders.