Symantec 2010 Annual Report Download - page 145

fair values was necessary for certain reporting units due to impairment charges and changes in our operating
structure in prior years.
Prior to performing our second step in the goodwill impairment analysis, we perform an assessment of long-
lived assets, including intangible assets, for impairment.
Intangible Assets. In connection with our acquisitions, we generally recognize assets for customer rela-
tionships, developed technology, acquired product rights (purchased product rights, technologies, databases,
patents, and contracts) and tradenames. Intangible assets are recognized at cost less accumulated amortization.
Amortization of intangible assets is provided on a straight-line basis over the estimated useful lives of the respective
assets, generally from one to eleven years. Amortization for developed technology and acquired product rights is
recognized in Cost of revenue. Amortization for customer lists and tradenames is recognized in Operating expenses.
On an interim basis, we determine if triggering events for impairment of intangible assets are present, and if so
assess recoverability of those intangible assets. To determine the recoverability of our definite-lived intangible
assets, when indicators of impairment are identified, we compare the carrying amounts against the estimated future
cash flows related to the underlying group of assets. These estimates are based on company forecasts and are subject
to change. In addition, for intangible assets with indefinite lives, we review such assets for impairment on an annual
basis consistent with the timing of the annual evaluation for goodwill.
We record impairment charges on developed technology or acquired product rights when we determine that the
net realizable value of the assets may not be recoverable. To determine the net realizable value of the assets, we use
the estimated future gross revenue from each product. Our estimated future gross revenue of each product is based
on forecasts and is subject to change.
Income Taxes
The provision for income taxes is computed using the asset and liability method, under which deferred tax
assets and liabilities are recognized for the expected future tax consequences of temporary differences between the
financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carryforwards in each
jurisdiction in which we operate. Deferred tax assets and liabilities are measured using the currently enacted tax
rates that apply to taxable income in effect for the years in which those tax assets are expected to be realized or
settled. We record a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than
not to be realized.
We are required to compute our income taxes in each federal, state, and international jurisdiction in which we
operate. This process requires that we estimate the current tax exposure as well as assess temporary differences
between the accounting and tax treatment of assets and liabilities, including items such as accruals and allowances
not currently deductible for tax purposes. The income tax effects of the differences we identify are classified as
current or long-term deferred tax assets and liabilities in our Consolidated Balance Sheets. Our judgments,
assumptions, and estimates relative to the current provision for income tax take into account current tax laws, our
interpretation of current tax laws, and possible outcomes of current and future audits conducted by foreign and
domestic tax authorities. Changes in tax laws or our interpretation of tax laws and the resolution of current and
future tax audits could significantly impact the amounts provided for income taxes in our Consolidated Balance
Sheets and Consolidated Statements of Operations. We must also assess the likelihood that deferred tax assets will
be realized from future taxable income and, based on this assessment, establish a valuation allowance, if required.
Our determination of our valuation allowance is based upon a number of assumptions, judgments, and estimates,
including forecasted earnings, future taxable income, and the relative proportions of revenue and income before
taxes in the various domestic and international jurisdictions in which we operate. To the extent we establish a
valuation allowance or change the valuation allowance in a period, we reflect the change with a corresponding
increase or decrease to our tax provision in our Consolidated Statements of Operations.
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SYMANTEC CORPORATION
Notes to Consolidated Financial Statements — (Continued)