Symantec 2014 Annual Report Download - page 148

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. Similar to goodwill impairment testing, a
qualitative assessment is first made to determine whether it is necessary to perform quantitative testing. This
initial assessment includes, among others, consideration of: (i) past, current and projected future revenues;
(ii) recent trends and market conditions, including discount rates among others; and (iii) valuation metrics, such
as royalty rates, involving similar companies that are publicly-traded, if available. If this initial qualitative
assessment indicates that it is more likely than not that impairment exists, a second step analysis is performed,
involving a comparison between the fair values of the asset or asset group with its respective carrying amounts
and the impairment amount is measured as the excess of the carrying amount over the fair value. These assets
generally include trade names and trademarks. Recoverability of indefinite-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 or asset group is expected to generate. If an asset group is considered to be impaired, such
amount would be measured as the difference between the carrying amount of the asset group 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.
Restructuring
Restructuring actions generally include significant actions involving employee-related severance charges
and contract termination costs. Employee-related severance charges are largely based upon substantive severance
plans, while some are mandated requirements in certain foreign jurisdictions. These charges are reflected in the
period when both the actions are probable and the amounts are estimable. Contract termination costs for leased
facilities primarily reflect costs that will continue to be incurred under the contract for its remaining term without
economic benefit to the Company. These charges are reflected in the period when the facility ceases to be used.
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
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