Seagate 2013 Annual Report Download - page 74

Table of Contents
SEAGATE TECHNOLOGY PLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Summary of Significant Accounting Policies
Cash, Cash Equivalents and Short-Term Investments. The Company considers all highly liquid investments with a remaining maturity of
90 days or less at the time of purchase to be cash equivalents. Cash equivalents are carried at cost, which approximates fair value. The
Company's short-term investments are primarily comprised of readily marketable debt securities with remaining maturities of more than 90 days
at the time of purchase. The Company has classified its entire investment portfolio as available-for-sale and it is stated at fair value with
unrealized gains and losses included in Accumulated other comprehensive income (loss), which is a component of Shareholders' Equity. The
Company evaluates the available-for sale securities in an unrealized loss position for other-than-temporary impairment. The amortized cost of
debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization and accretion are included in
interest income. Realized gains and losses are included in Other, net. The cost of securities sold is based on the specific identification method.
Restricted Cash and Investments.
Restricted cash and investments represents cash and cash equivalents and investments that are restricted
as to withdrawal or use for other than current operations.
Allowances for Doubtful Accounts. The Company maintains an allowance for uncollectible accounts receivable based upon expected
collectability. This reserve is established based upon historical trends, global macroeconomic conditions and an analysis of specific exposures.
The provision for doubtful accounts is recorded as a charge to Marketing and administrative expense.
Inventory. Inventories are valued at the lower of cost (using the first-in, first-out method) or market. Market value is based upon an
estimated average selling price reduced by estimated cost of completion and disposal.
Property, Equipment and Leasehold Improvements. Property, equipment and leasehold improvements are stated at cost. Equipment and
buildings are depreciated using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized
using the straight-line method over the shorter of the estimated life of the asset or the remaining term of the lease. The costs of additions and
substantial improvements to property, equipment and leasehold improvements, which extend the economic life of the underlying assets, are
capitalized. The cost of maintenance and repairs to property, equipment and leasehold improvements are expensed as incurred.
Assessment of Goodwill and Other Long-lived Assets for Impairment. The Company accounts for goodwill in accordance with
Accounting Standards Codification (ASC) Topic 350 (ASC 350), Intangibles—Goodwill and Other. During fiscal year 2012, the Company
adopted ASU No. 2011-08, Intangibles—Goodwill and Other (ASC Topic 350)—Testing Goodwill for Impairment. The Company performs a
qualitative assessment at the end of each reporting period to determine if any events or circumstances exist, such as an adverse change in
business climate or a decline in the overall industry that would indicate that it would more likely than not reduce the fair value of a reporting unit
below its carrying amount, including goodwill.
The Company tests other long-lived assets, including property, equipment and leasehold improvements and other intangible assets subject
to amortization, for recoverability whenever events or changes in circumstances indicate that the carrying value of those assets may not be
recoverable. The Company performs a recoverability test to assess the recoverability of an asset group. If the recoverability test indicates that the
carrying value of the asset group is not recoverable, the Company will estimate the fair value of the asset group and the excess of the carrying
value over the fair value is allocated pro rata to
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