Symantec 2012 Annual Report Download - page 154

SYMANTEC CORPORATION
Notes to Consolidated Financial Statements — (Continued)
by the comparison of the carrying amount of the asset group to which the assets are assigned to the sum of the
undiscounted estimated future cash flows the asset group is expected to generate. If the asset is considered to be
impaired, such amount would be measured as the difference between the carrying amount of the asset and its fair
value. Recoverability and impairment of other finite-lived intangible assets, particularly developed technology
and patents, would be measured by the comparison of the carrying amount of the asset to the sum of
undiscounted estimated future product revenues offset by estimated future costs to dispose of the product. In
addition, for indefinite-lived intangible assets, we review such assets for impairment on an annual basis
consistent with the timing of the annual evaluation for goodwill. These assets generally include tradenames,
trademarks and in-process research and development. Recoverability of infinite-lived intangible assets would be
measured by the comparison of the carrying amount of the asset to the sum of the discounted estimated future
cash flows the asset is expected to generate. If the asset is considered to be impaired, such amount would be
measured as the difference between the carrying amount of the asset and its fair value. Our cash flow
assumptions are based on historical and future revenue, operating costs, and other relevant factors. Assumptions
and estimates about the remaining useful lives of our intangible assets are subjective and are affected by changes
to our business strategies. These estimates may be 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 Income. 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 Income.
We apply the authoritative guidance on income taxes that prescribes a minimum recognition threshold a tax
position is required to meet before being recognized in the financial statements. It also provides guidance on
derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and
transition.
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