Cabela's 2014 Annual Report Download - page 89

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CABELA’S INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands Except Share and Per Share Amounts)
discretion. The expected lease term is used to determine whether a lease is capital or operating and is used to
calculate straight-line rent expense. Additionally, the depreciable life of buildings and leasehold improvements is
limited by the expected lease term.
Property and Equipment – Property and equipment are stated at cost. Depreciation and amortization are
provided over the estimated useful lives of the assets, including assets held under capital leases, on a straight-line
basis. Leasehold improvements are amortized over the lease term or, if shorter, the useful lives of the improvements.
Assets held under capital lease agreements are amortized using the straight-line method over the shorter of the
estimated useful lives of the assets or the lease term. When property is fully depreciated, retired, or otherwise
disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is
reflected in the consolidated statements of income. The costs of major improvements that extend the useful life of an
asset are capitalized. Long-lived assets are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. Capitalized interest on projects during the
construction period totaled $7,788, $4,270, and $2,798 for 2014, 2013, and 2012, respectively. Costs related to
internally developed software are capitalized and amortized on a straight-line basis over their estimated useful lives.
Intangible Assets – Intangible assets are recorded in other assets and include non-compete agreements and
goodwill. At the end of 2014 and 2013, goodwill and intangible assets totaled $3,565 and $4,164, net of accumulated
amortization of $2,523 and $2,468, respectively. During the fourth quarters of 2014, 2013, and 2012, the Company
completed impairment analyses of its goodwill and other intangible assets. The Company did not recognize any
impairments on intangible assets in 2014, 2013, or 2012. The Company records impairment charges when projected
discounted cash flows are less than the carrying value of the reporting unit.
Intangible assets, excluding goodwill, totaled $542 at the end of 2014 and are amortized over the next three
years as follows: $304 (2015), $163 (2016), and $75 (2017). The Company had goodwill of $3,023 and $3,295 in
its consolidated balance sheets at the end of 2014 and 2013, respectively, relating to an acquisition of a Canadian
outdoors specialty retailer in 2007. The change in the carrying value of goodwill from 2013 was due to foreign
currency translation adjustments.
Other Property – Other property primarily consists of unimproved land not used in our merchandising
business and is recorded at the lower of cost or estimated fair value less estimated selling costs. Proceeds from
the sale of other property are recognized in other revenue and the corresponding costs of other property sold are
recognized in costs of other revenue. Other property with a carrying value of $17,900 and $15,109 at the end of
2014 and 2013, respectively, was included in other assets in the consolidated balance sheets.
Government Economic Assistance – When Cabela’s constructs a new retail store or retail development,
the Company may receive economic assistance from local governments to fund a portion or all of the Company’s
associated capital costs. This assistance typically comes in the form of cash grants, land grants, and/or proceeds
from the sale of economic development bonds funded by the local government. The Company has historically
purchased the majority of the bonds associated with its developments. Cash grants are made available to fund land,
retail store construction, and/or development infrastructure costs. Economic development bonds are typically repaid
through sales and/or property taxes generated by the retail store and/or within a designated development area. Cash
and land grants are recognized as deferred grant income as a reduction to the costs, or recognized fair value in the
case of land grants, of the associated property and equipment. Property and equipment was reduced by deferred
grant income of $283,432 and $289,903 at the end of 2014 and 2013, respectively. Deferred grant income is amortized
to earnings, as a reduction of depreciation expense, over the average estimated useful life of the associated assets.
Deferred grant income estimates, and their associated present value, are updated whenever events or changes
in circumstances indicate that their recorded amounts may not be recovered. These estimates are determined
when estimation of the fair value of associated economic development bonds are performed if there are related
bond investments. If it is determined that the Company will not receive the full amount remaining from the bonds,