Rayovac 2012 Annual Report Download - page 97

SPECTRUM BRANDS HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)
(In thousands, except per share amounts)
The costs of both temporary and permanent displays are capitalized as a prepaid asset until shipped to the
customer and are included in Prepaid expenses and other in the accompanying Consolidated Statements of
Financial Position. The costs of temporary displays are expensed in the period in which they are shipped to
customers and the costs of permanent fixtures are amortized over an estimated useful life of one to two years
from the date they are shipped to customers and are reflected in Deferred charges and other in the accompanying
Consolidated Statements of Financial Position.
(g) Inventories
The Company’s inventories are valued at the lower of cost or net realizable value. Cost of inventories is
determined using the first-in, first-out (FIFO) method.
(h) Property, Plant and Equipment
Property, plant and equipment are recorded at cost or at fair value if acquired in a purchase business combination.
Depreciation on plant and equipment is calculated on the straight-line method over the estimated useful lives of
the assets. Depreciable lives by major classification are as follows:
Building and improvements ........................................ 20-40 years
Machinery, equipment and other .................................... 2-15 years
Plant and equipment held under capital leases are amortized on a straight-line basis over the shorter of the
lease term or estimated useful life of the asset and is included in depreciation expense.
The Company reviews long-lived assets for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. The Company evaluates recoverability of
assets to be held and used by comparing the carrying amount of an asset to future net cash flows expected to be
generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured
by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be
disposed of are reported at the lower of the carrying amount or fair value less costs to sell.
(i) Intangible Assets
Intangible assets are recorded at cost or at fair value if acquired in a purchase business combination. In
connection with fresh-start reporting, Intangible Assets were recorded at their estimated fair value on August 30,
2009. Customer lists, proprietary technology and certain trade name intangibles are amortized, using the straight-
line method, over their estimated useful lives of approximately 1 to 20 years. Excess of cost over fair value of net
assets acquired (goodwill) and indefinite-lived intangible assets (certain trade name intangibles) are not
amortized. Goodwill is tested for impairment at least annually, at the reporting unit level with such groupings
being consistent with the Company’s reportable segments. If impairment is indicated, a write-down to fair value
(normally measured by discounting estimated future cash flows) is recorded. Indefinite-lived trade name
intangibles are tested for impairment at least annually by comparing the fair value, determined using a relief from
royalty methodology, with the carrying value. Any excess of carrying value over fair value is recognized as an
impairment loss in income from operations.
ASC Topic 350: “Intangibles-Goodwill and Other,” (“ASC 350”) requires that goodwill and indefinite-
lived intangible assets be tested for impairment annually, or more often if an event or circumstance indicates that
an impairment loss may have been incurred. The Company’s management uses its judgment in assessing whether
assets may have become impaired between annual impairment tests. Indicators such as unexpected adverse
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