Symantec 2016 Annual Report Download - page 151

assets is measured by the comparison of the carrying amount of the asset to the discounted future cash flows of
the asset is expected to generate. If the carrying amount of the asset exceeds its discounted future cash flows, an
impairment loss is recognized for the difference between the asset’s carrying amount and fair value.
Restructuring, separation and transition
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 charges result from mandated requirements in certain foreign jurisdictions. These charges are
reflected in the period when both the actions are probable and the amounts are estimable. Separation and other
related costs include advisory, consulting and other costs incurred in connection with the separation of Veritas.
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. Costs of providing transition services to Veritas after January 29,
2016, the date of the sale, are recorded in continuing operations.
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 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 (“ASU”) No. 2015-17, Income Taxes. 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.
We apply the authoritative guidance on income taxes that prescribes a minimum recognition threshold that a
tax position is required to meet before being recognized in the consolidated financial statements. It also provides
guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods,
disclosure and transition.
This guidance prescribes a two-step process to determine the amount of tax benefit to be recognized. The
first step is to evaluate the tax position for recognition by determining if the weight of available evidence
indicates that it is more likely than not that the position will be sustained on audit, including resolution of related
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