Polaris 2010 Annual Report Download - page 62

Use of estimates: The preparation of financial statements in conformity with accounting principles generally
accepted in the United States requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Ultimate results could
differ from those estimates.
Cash equivalents: Polaris considers all highly liquid investments purchased with an original maturity of
90 days or less to be cash equivalents. Cash equivalents are stated at cost, which approximates fair value. Such
investments consist principally of commercial paper and money market mutual funds.
Allowance for doubtful accounts: Polaris’ financial exposure to collection of accounts receivable is limited due
to its agreements with certain finance companies. For receivables not serviced through these finance companies, the
Company provides a reserve for doubtful accounts based on historical rates and trends. This reserve is adjusted
periodically as information about specific accounts becomes available.
Inventories: Inventories are stated at the lower of cost (first-in, first-out method) or market. The major
components of inventories are as follows (in thousands):
2010 2009
December 31,
Raw materials and purchased components .......................... $ 35,580 $ 19,777
Service parts, garments and accessories ............................ 60,813 58,556
Finished goods .............................................. 155,744 116,575
Less: reserves ............................................... (16,210) (15,593)
Inventories ................................................. $235,927 $179,315
Property and equipment: Property and equipment is stated at cost. Depreciation is provided using the straight-
line method over the estimated useful life of the respective assets, ranging from 10-40 years for buildings and
improvements and from 1-7 years for equipment and tooling. Fully depreciated tooling is eliminated from the
accounting records annually.
Goodwill and other intangible assets: ASC Topic 350 prohibits the amortization of goodwill and intangible
assets with indefinite useful lives. Topic 350 requires that these assets be reviewed for impairment at least annually.
An impairment charge is recognized only when the estimated fair value of a reporting unit, including goodwill, is
less than its carrying amount. The Company performed analyses as of December 31, 2010 and 2009. The results of
the analyses indicated that no goodwill or intangible impairment existed. In accordance with Topic 350, the
Company will continue to complete an impairment analysis on an annual basis.
The changes in the carrying amount of goodwill for the years ended December 31, 2010 and 2009 are as
follows (in thousands):
2010 2009
Balance as of beginning of year ................................... $25,869 $24,693
Goodwill acquired during the year .................................. 1,985 —
Currency translation effect on foreign goodwill balances ................. 500 1,176
Balance as of end of year ........................................ $28,354 $25,869
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POLARIS INDUSTRIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)