Seagate 2014 Annual Report Download - page 71
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SEAGATETECHNOLOGYPLC
NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS—(Continued)
SummaryofSignificantAccountingPolicies
Cash,CashEquivalentsandShort-TermInvestments.TheCompanyconsidersallhighlyliquidinvestmentswitharemainingmaturityof90daysorlessat
thetimeofpurchasetobecashequivalents.Cashequivalentsarecarriedatcost,whichapproximatesfairvalue.TheCompany'sshort-terminvestmentsare
primarilycomprisedofmoneymarketfunds,certificatesofdeposits,andotherinterest-bearingbankdeposits.TheCompanyhasclassifieditsmarketablesecurities
asavailable-for-saleandtheyarestatedatfairvaluewithunrealizedgainsandlossesincludedinAccumulatedothercomprehensiveincome(loss),whichisa
componentofShareholders'Equity.TheCompanyevaluatestheavailable-forsalesecuritiesinanunrealizedlosspositionforother-than-temporaryimpairment.
RealizedgainsandlossesareincludedinOther,net.Thecostofsecuritiessoldisbasedonthespecificidentificationmethod.
RestrictedCashandInvestments.Restrictedcashandinvestmentsrepresentcashandcashequivalentsandinvestmentsthatarerestrictedastowithdrawal
oruseforotherthancurrentoperations.
AllowancesforDoubtfulAccounts.TheCompanymaintainsanallowanceforuncollectibleaccountsreceivablebaseduponexpectedcollectability.This
reserveisestablishedbaseduponhistoricaltrends,globalmacroeconomicconditionsandananalysisofspecificexposures.Theprovisionfordoubtfulaccountsis
recordedasachargetoMarketingandadministrativeexpense.
Inventory.Inventoriesarevaluedatthelowerofcost(usingthefirst-in,first-outmethod)ormarket.Marketvalueisbaseduponanestimatedaverage
sellingpricereducedbyestimatedcostofcompletionanddisposal.
Property,EquipmentandLeaseholdImprovements.Property,equipmentandleaseholdimprovementsarestatedatcost.Equipmentandbuildingsare
depreciatedusingthestraight-linemethodovertheestimatedusefullivesoftheassets.Leaseholdimprovementsareamortizedusingthestraight-linemethodover
theshorteroftheestimatedlifeoftheassetortheremainingtermofthelease.Thecostsofadditionsandsubstantialimprovementstoproperty,equipmentand
leaseholdimprovements,whichextendtheeconomiclifeoftheunderlyingassets,arecapitalized.Thecostofmaintenanceandrepairstoproperty,equipmentand
leaseholdimprovementsareexpensedasincurred.
AssessmentofGoodwillandOtherLong-livedAssetsforImpairment.TheCompanyaccountsforgoodwillinaccordancewithAccountingStandards
Codification(ASC)Topic350(ASC350),Intangibles—GoodwillandOther.Duringfiscalyear2012,theCompanyadoptedASUNo.2011-08,Intangibles—
GoodwillandOther(ASCTopic350)—TestingGoodwillforImpairment.TheCompanyperformsaqualitativeassessmentinthefourthquarterofeachyear,or
morefrequentlyifindicatorsofpotentialimpairmentexist,todetermineifanyeventsorcircumstancesexist,suchasanadversechangeinbusinessclimateora
declineintheoverallindustrythatwouldindicatethatitwouldmorelikelythannotreducethefairvalueofareportingunitbelowitscarryingamount,including
goodwill.Ifitisdeterminedinthequalitativeassessmentthatthefairvalueofareportingunitismorelikelythannotbelowitscarryingamount,including
goodwill,thentheCompanyperformsaquantitativetwo-stepimpairmenttest.Thefirststep,identifyingapotentialimpairment,comparesthefairvalueofa
reportingunitwithitscarryingamount,includinggoodwill.Ifthecarryingvalueofthereportingunitexceedsitsfairvalue,thesecondstepwouldneedtobe
conducted.Thesecondstep,measuringtheimpairmentloss,comparestheimpliedfairvalueofthereportingunitgoodwillwiththecarryingamountofthat
goodwill.Anyexcessofthereportingunitgoodwillcarryingvalueoveritsimpliedfairvalueisrecognizedasanimpairmentloss.
TheCompanytestsotherlong-livedassets,includingproperty,equipmentandleaseholdimprovementsandotherintangibleassetssubjecttoamortization,for
recoverabilitywhenevereventsor
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