Kohl's 2008 Annual Report Download - page 48

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KOHL’S CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
1. Business and Summary of Accounting Policies (continued)
Favorable Lease Rights
Favorable lease rights are generally amortized on a straight-line basis over the remaining base lease term
plus certain options with a maximum of 50 years. Accumulated amortization was $108 million at January 31,
2009 and $96 million at February 2, 2008. Amortization begins when the respective stores are opened.
Amortization expense was $13 million for 2008, $12 million for 2007 and $13 million for 2006. Amortization
expense for current favorable lease right assets is estimated to be approximately $10 million per year for each of
the next five years.
Long-Lived Assets
All long-lived assets (including favorable lease rights) are reviewed when events or changes in
circumstances indicate that the asset’s carrying value may not be recoverable. If such indicators are present, it is
determined whether the sum of the estimated undiscounted future cash flows attributable to such assets is less
than their carrying amounts. We evaluated the ongoing value of our property and equipment and other long-lived
assets at year-end 2008, 2007 and 2006 and determined that there was no significant impact on our results of
operations.
Goodwill
We completed our annual goodwill impairment tests for 2008, 2007 and 2006 and determined there was no
impairment of existing goodwill. The goodwill balance was $9 million as of both January 31, 2009 and
February 2, 2008.
Accrued Liabilities
Accrued liabilities consist of the following:
Jan. 31,
2009
Feb. 2,
2008
(In Millions)
Various liabilities to customers .................................. $200 $201
Sales, property and use taxes .................................... 121 113
Accrued construction costs ..................................... 116 121
Payroll and related fringe benefits ................................ 94 69
Other accruals ............................................... 281 294
$812 $798
The various liabilities to customers include gift cards and merchandise return cards that have been issued
but not presented for redemption.
Self-Insurance
We use a combination of insurance and self-insurance for a number of risks including workers’
compensation, general liability and employee-related health care benefits, a portion of which is paid by our
associates. Liabilities associated with these losses include estimates of both reported losses and losses incurred
but not yet reported. We use a third-party actuary, which considers historical claims experience, demographic
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