Symantec 2016 Annual Report Download - page 122

assessment considers events and circumstances that might indicate that a reporting unit’s fair value is less than its
carrying amount. These include macro-economic conditions such as deterioration in the entity’s operating
environment or industry or market considerations; entity-specific events such as increasing costs, declining
financial performance, or loss of key personnel; or other events such as the sale of a reporting unit or a sustained
decrease in the company’s stock price. If it is determined, as a result of the qualitative assessment, that it is more-
likely-than-not that the fair value of a reporting unit is less than its carrying amount, a quantitative test is
performed. In the first step of the quantitative testing, we compare the fair value of each reporting unit to its
carrying amount. If the first step indicates that the fair value of each reporting unit is greater than its carrying
amount, no further testing is required. Goodwill impairment tests require judgment, including the identification
of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting
units, and determination of the fair value of each reporting unit. To determine a reporting unit’s fair value, we
generally use the income approach which is based on the estimated discounted future cash flows of that unit. The
estimation of future cash flows requires us to make projections of future revenues and expenses of each reporting
unit and establish a weighted-average cost of capital to discount these cash flows. Changes in these key
assumptions and estimates or other assumptions used in this process could materially affect our impairment
analysis in a given year. For the fiscal year ended April 1, 2016, we concluded that goodwill was not impaired as
the results of our annual impairment test indicate that the fair values of our reporting units are significantly in
excess of their carrying values.
Long-lived assets impairment. Long-lived assets, including property and equipment, intangible assets and
equity investments, excluding goodwill, are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset or group of assets may not be recoverable. The
evaluation is performed at the lowest level of identifiable cash flows independent of other assets. An impairment
loss would be recognized when estimated undiscounted future cash flows generated from the assets are less than
their carrying amount. Measurement of an impairment loss would be based on the excess of the carrying amount
of the asset group over its fair value. Our estimates of future cash flows require significant judgment based on
historical and anticipated future operating results and are subject to many factors which are subject to variability
and change.
Contingencies and litigation
We evaluate contingent liabilities including threatened or pending litigation in accordance with the
authoritative guidance on contingencies. We assess the likelihood of any adverse judgments or outcomes from
potential claims or proceedings, as well as potential ranges of probable losses, when the outcomes of the claims
or proceedings are probable and reasonably estimable. A determination of the amount of accrued liabilities
required, if any, for these contingencies is made after the analysis of each separate matter. Because of
uncertainties related to these matters, we base our estimates on the information available at the time of our
assessment. As additional information becomes available, we reassess the potential liability related to our
pending claims and litigation and may revise our estimates. Any revisions in the estimates of potential liabilities
could have a material impact on our operating results and financial position.
Income taxes
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 as of
April 3, 2015, and as long-term deferred tax assets and liabilities as of April 1, 2016, following the adoption of
Accounting Standards Update No. 2015-17, Income Taxes. See Note 1 of the Notes to Consolidated Financial
Statements in this annual report for additional information. 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
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