Seagate 2015 Annual Report Download - page 73
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SEAGATETECHNOLOGYPLC
NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS—(Continued)
fairvalueoftheassetgroupandtheexcessofthecarryingvalueoverthefairvalueisallocatedproratatoderivetheadjustedcarryingvalueofassetsintheasset
group.Theadjustedcarryingvalueofeachassetintheassetgroupisnotreducedbelowitsfairvalue.
TheCompanytestsotherintangibleassetsnotsubjecttoamortizationwhenevereventsoccurorcircumstanceschange,suchasdecliningfinancial
performance,deteriorationintheenvironmentinwhichtheentityoperatesordeterioratingmacroeconomicconditionsthathaveanegativeeffectonfuture
expectedearningsandcashflowsthatcouldaffectsignificantinputsusedtodeterminethefairvalueoftheindefinite-livedintangibleasset.
DerivativeFinancialInstruments.TheCompanyappliestherequirementsofASCTopic815("ASC815"),DerivativesandHedging.ASC815requiresthat
allderivativesberecordedonthebalancesheetatfairvalueandestablishescriteriafordesignationandeffectivenessofhedgingrelationships.
EstablishmentofWarrantyAccruals.TheCompanyestimatesprobableproductwarrantycostsatthetimerevenueisrecognized.TheCompanygenerally
warrantsitsproductsforaperiodof1to5years.TheCompany'swarrantyprovisionconsidersestimatedproductfailureratesandtrends(includingthetimingof
productreturnsduringthewarrantyperiods),andestimatedrepairorreplacementcostsrelatedtoproductqualityissues,ifany.TheCompanyalsoexercises
judgmentinestimatingitsabilitytosellcertainrepairedproducts.Shouldactualexperienceinanyfutureperioddiffersignificantlyfromitsestimates,the
Company'sfutureresultsofoperationscouldbemateriallyaffected.
RevenueRecognition,SalesReturnsandAllowances,andSalesIncentivePrograms.TheCompany'srevenuerecognitionpolicycomplieswithASCTopic
605(ASC605),RevenueRecognition.Revenuefromsalesofproducts,includingsalestodistributioncustomers,isgenerallyrecognizedwhentitleandriskofloss
haspassedtothebuyer,whichtypicallyoccursuponshipmentfromtheCompanyorthirdpartywarehousefacilities,persuasiveevidenceofanarrangementexists,
includingafixedordeterminablepricetothebuyer,andwhencollectabilityisreasonablyassured.Revenuefromsalesofproductstocertaindirectretailcustomers
andtocustomersincertainindirectretailchannelsisrecognizedonasell-throughbasis.
TheCompanyrecordsestimatedproductreturnsatthetimeofshipment.TheCompanyalsoestimatesreductionstorevenueforsalesincentiveprograms,such
aspriceprotection,andvolumeincentives,andrecordssuchreductionswhenrevenueisrecorded.TheCompanyestablishescertaindistributorandOEMsales
programsaimedatincreasingcustomerdemand.ForOEMsales,rebatesaretypicallybasedonanOEMcustomer'svolumeofpurchasesfromSeagateorother
agreeduponrebateprograms.Forthedistributionchannel,theseprogramstypicallyinvolverebatesrelatedtoadistributor'slevelofsales,ordersize,advertisingor
pointofsaleactivityandpriceprotectionadjustments.TheCompanyprovidesfortheseobligationsatthetimethatrevenueisrecordedbasedonestimated
requirements.Marketingdevelopmentprogramsarerecordedasareductiontorevenue.
ShippingandHandling.TheCompanyincludescostsrelatedtoshippingandhandlinginCostofrevenueforallperiodspresented.
RestructuringCosts.TheCompanyrecordsrestructuringactivitiesincludingcostsforone-timeterminationbenefitsinaccordancewithASCTopic420
("ASC420"),ExitorDisposalCostObligations.ThetimingofrecognitionforseverancecostsaccountedforunderASC420dependsonwhetheremployeesare
requiredtorenderserviceuntiltheyareterminatedinordertoreceivetheterminationbenefits.Ifemployeesarerequiredtorenderserviceuntiltheyareterminated
inordertoreceivetheterminationbenefits,aliabilityisrecognizedratablyoverthefutureserviceperiod.Otherwise,aliabilityisrecognized
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