Restoration Hardware 2014 Annual Report Download - page 93

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determining whether lease expense is recognized on a straight-line or accelerated basis, depending on whether
the lessee is expected to consume more than an insignificant portion of the leased asset’s economic benefits. The
comment period for the Exposure Draft ended on September 13, 2013. If and when effective, this Exposure Draft
will likely have a significant impact on the Company’s consolidated financial statements. However, as the
standard-setting process is still ongoing, the Company is unable to determine the impact this proposed change in
accounting standards will have on its consolidated financial statements.
Presentation of Unrecognized Tax Benefits
In July 2013, the FASB issued an Accounting Standards Update 2013-11—Income Taxes (Topic 740),
which requires that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented
in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar
tax loss, or a tax credit carryforward, with certain exceptions. This guidance is effective for annual and interim
reporting periods beginning after December 15, 2013, with early adoption permitted. The Company adopted this
guidance in the first quarter of fiscal 2014 and adoption did not have a material impact on its consolidated
financial statements.
Revenue from Contracts with Customers
In May 2014, the FASB and International Accounting Standards Board issued their converged accounting
standard update on revenue recognition, Accounting Standards Update 2014-09—Revenue from Contracts with
Customers (Topic 606). This guidance outlines a single comprehensive model for companies to use in accounting
for revenue arising from contracts with customers and supersedes most current revenue recognition guidance,
including industry-specific guidance. The core principle of the revenue model is that revenue is recognized when
a customer obtains control of a good or service. A customer obtains control when it has the ability to direct the
use of and obtain the benefits from the good or service. Under the new guidance, transfer of control is no longer
the same as transfer of risks and rewards as indicated in prior guidance. The Company will also need to apply
new guidance to determine whether revenue should be recognized over time or at a point in time. This guidance
is effective retrospectively for fiscal years and interim periods within those years beginning after December 15,
2016 (the Company’s first quarter of fiscal 2017). The Company does not currently believe this guidance will
have a material impact on its consolidated financial statements.
Consolidation Accounting
In February 2015, the FASB issued Accounting Standards Update No. 2015-02—Amendments to the
Consolidation Analysis (Topic 810), which improves targeted areas of the consolidation guidance and reduces the
number of consolidation models. The amendments in the guidance are effective for fiscal years and interim
periods within those years beginning after December 15, 2015 (the Company’s first quarter of fiscal 2016), with
early adoption permitted. The Company is currently evaluating the effect the guidance will have on its
consolidated financial statements.
NOTE 4—PREPAID EXPENSE AND OTHER ASSETS
Prepaid expense and other current assets consist of the following (in thousands):
January 31,
2015
February 1,
2014
Capitalized catalog costs $46,911 $ 49,274
Vendor deposits 21,585 36,694
Prepaid expense and other current assets 19,480 17,185
Total prepaid expense and other current assets $87,976 $103,153
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