Best Buy 2001 Annual Report Download - page 40

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$ in thousands, except per share amounts
1. Summary of Significant Accounting Policies
Description of Business
The Company has operated in a single business segment, selling personal computers and other home office products, consumer electronics,
entertainment software, major appliances and related accessories principally through its retail stores. During the fourth quarter of
fiscal 2001, the Company acquired the common stock of M usicland Stores Corporation (Musicland) and Magnolia Hi-Fi, Inc.
(M agnolia Hi-Fi). M usicland is principally a mall-based retailer of pre-recorded home entertainment products. M agnolia Hi-Fi is a
Seattle-based, high-end retailer of audio and video products. The results of the acquired businesses have been included in the
consolidated financial statements since the dates of acquisition (see N ote 2).
Basis of Presentation
The consolidated financial statements include the accounts of Best Buy Co., Inc. and its subsidiaries. Significant intercompany
accounts and transactions have been eliminated. All subsidiaries are wholly owned.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts in the consolidated balance sheets and statements of earnings, as well
as the disclosure of contingent liabilities. Actual results could differ from these estimates and assumptions.
Fiscal Year
The Company’s fiscal year ends on the Saturday nearest the end of February. Fiscal 20 01 included 53 weeks, while fiscal 2000
and 1999 each included 52 weeks.
Cash and Cash Equivalents
The Company considers short-term investments with a maturity of three months or less when purchased to be cash equivalents. Cash
equivalents are carried at cost, which approximates market value. Restricted cash amounts are not significant.
Recoverable Costs From Developed Properties
The costs of acquisition and development of properties which the Company intends to sell and lease back or recover from landlords
within one year are included in current assets.
Merchandise Inventories
Merchandise inventories are recorded at the lower of cost or market. The primary methods used to determine cost are the average
cost method and the retail inventory method.
Notes to Consolidated Financial Statements
Best Buy Co., Inc.
41
N otes