Sunbeam 2001 Annual Report Download - page 17

Notes to Consolidated Financial
Statements
1. Significant Accounting Policies
Basis of Presentation
These consolidated financial statements
have been prepared in accordance with gener-
ally accepted accounting principles. The con-
solidated financial statements include the ac-
counts of Alltrista Corporation and its
subsidiaries (the ‘‘Company’’). All significant
intercompany transactions and balances have
been eliminated upon consolidation. Certain
reclassifications have been made in the Com-
pany’s financial statements of prior years to
conform to the current year presentation. These
reclassifications have no impact on previously
reported net income.
The businesses comprising the Company
have interests in consumer and materials based
products. See Business Segment Information
(Note 4).
Use of Estimates
Preparation of the consolidated financial
statements requires estimates and assumptions
that affect amounts reported and disclosed in
the financial statements and related notes. Ac-
tual results could differ from those estimates.
Revenue Recognition
Revenue from the sale of products is prima-
rily recognized at the time product is shipped
to customers. The Company allows customers
to return defective or damaged products as well
as certain other products for credit, replace-
ment, or exchange. Revenue is recognized as
the net amount to be received after deducting
estimated amounts for product returns, dis-
counts, and allowances. The Company pro-
vides credit, in the normal course of business,
to its customers. The Company also maintains
an allowance for doubtful customer accounts
and charges actual losses when incurred to this
allowance.
Freight Costs
Freight costs on goods shipped to custom-
ers are included in Cost of Sales.
Cash and Cash Equivalents
Cash equivalents include financial invest-
ments with a maturity of three months or less
when purchased.
Inventories
Inventories are stated at the lower of cost,
determined on the first-in, first-out method, or
market.
Property, Plant and Equipment
Property, plant and equipment are recorded
at cost. Maintenance and repair costs are
charged to expense as incurred, and expendi-
tures that extend the useful lives of the assets
are capitalized. The Company reviews prop-
erty, plant and equipment for impairment
whenever events or circumstances indicate that
carrying amounts may not be recoverable
through future undiscounted cash flows, ex-
cluding interest cost.
Depreciation
Depreciation is provided on the straight-
line method in amounts sufficient to amortize
the cost of the assets over their estimated useful
lives (buildings – 30 to 50 years; machinery and
equipment–5to15years).
Goodwill
Goodwill represents the excess of the pur-
chase prices of acquired businesses over the
estimated fair values of the net assets acquired.
Goodwill is amortized on a straight-line basis
over periods not to exceed 20 years. The Com-
pany evaluates these assets for impairment
whenever events or circumstances indicate that
carrying amounts may not be recoverable
through future undiscounted cash flows, ex-
cluding interest costs. If facts and circum-
stances suggest that a subsidiary’s net assets are
impaired, the Company assesses the fair value
of the underlying business and reduces good-
will to an amount that results in the book value
of the operation approximating fair value.
Taxes on Income
Deferred taxes are provided for differences
between the financial statement and tax bases
Alltrista
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