Walmart 2014 Annual Report Download - page 43

Walmart 2014 Annual Report 41
and January 31, 2013, the Company’s inventories valued at LIFO
approximate those inventories as if they were valued at FIFO.
Property and Equipment
Property and equipment are stated at cost. Gains or losses on disposition
are recognized as earned or incurred. Costs of major improvements are
capitalized, while costs of normal repairs and maintenance are charged
to expense as incurred. The following table summarizes the Company’s
property and equipment balances and includes the estimated useful lives
that are generally used to depreciate the assets on a straight-line basis:
Fiscal Years Ended
Estimated January 31,
(Amounts in millions) Useful Lives 2014 2013
Land N/A $ 26,184 $ 25,612
Buildings and improvements 3-40 years 95,488 90,686
Fixtures and equipment 3-25 years 42,971 40,903
Transportation equipment 3-15 years 2,785 2,796
Construction in progress N/A 5,661 5,828
Property and equipment $173,089 $165,825
Accumulated depreciation (57,725) (51,896)
Property and equipment, net $115,364 $113,929
Leasehold improvements are depreciated over the shorter of the
estimated useful life of the asset or the remaining expected lease term.
Depreciation expense for property and equipment, including amor-
tization of property under capital leases, for scal 2014, 2013 and 2012
was $8.8 billion, $8.4 billion and $8.1 billion, respectively. Interest costs
capitalized on construction projects were $78 million, $74 million and
$60 million in scal 2014, 2013 and 2012, respectively.
Long-Lived Assets
Long-lived assets are stated at cost. Management reviews long-lived
assets for indicators of impairment whenever events or changes in cir-
cumstances indicate that the carrying amount may not be recoverable.
The evaluation is performed at the lowest level of identiable cash ows,
which is at the individual store or club level or, in certain circumstances,
a market group of stores. Undiscounted cash ows expected to be
generated by the related assets are estimated over the assets’ useful lives
based on updated projections. If the evaluation indicates that the
carrying amount of the assets may not be recoverable, any potential
impairment is measured based upon the fair value of the related asset
or asset group as determined by an appropriate market appraisal or
other valuation technique. Impairment charges of long-lived assets
for scal 2014, 2013 and 2012 were not signicant.
Goodwill and Other Acquired Intangible Assets
Goodwill represents the excess of the purchase price over the fair value
of net assets acquired in business combinations and is allocated to the
appropriate reporting unit when acquired. Other acquired intangible
assets are stated at the fair value acquired as determined by a valuation
technique commensurate with the intended use of the related asset.
Goodwill and indenite-lived intangible assets are not amortized; rather,
they are evaluated for impairment annually and whenever events or
changes in circumstances indicate that the value of the asset may be
impaired. Denite-lived intangible assets are considered long-lived
assets and are amortized on a straight-line basis over the periods that
expected economic benets will be provided.
Goodwill is evaluated for impairment using either a qualitative or
quantitative approach for each of the Company’s reporting units.
Generally, a qualitative assessment is rst performed to determine
whether a quantitative goodwill impairment test is necessary. If man-
agement determines, after performing an assessment based on the
qualitative factors, that the fair value of the reporting unit is more likely
than not less than the carrying amount, or that a fair value of the reporting
unit substantially in excess of the carrying amount cannot be assured,
then a quantitative goodwill impairment test would be required. The
quantitative test for goodwill impairment is performed by determining the
fair value of the related reporting units. Fair value is measured based on
the discounted cash ow method and relative market-based approaches.
For the reporting units that were tested using only the qualitative
assessment, management determined that the fair value of each
reporting unit is more likely than not greater than the carrying amount
and, as a result, quantitative analyses were not required. For the reporting
units tested using a quantitative impairment test, management deter-
mined the fair value of each reporting unit is greater than the carrying
amount. Accordingly, the Company has not recorded any impairment
charges related to goodwill.
The following table reects goodwill activity, by reportable segment,
for scal 2014 and 2013:
Walmart
(Amounts in millions) Walmart U.S. International Sam’s Club Total
Balances as of
February 1, 2012 $439 $19,899 $313 $20,651
Changes in currency
translation and other — (65) — (65)
Purchase accounting
adjustments for
prior scal year
acquisitions
(1)
4 (532) — (528)
Acquisitions
(2)
— 439 — 439
Balances as of
January 31, 2013 443 19,741 313 20,497
Changes in currency
translation and other — (1,000) — (1,000)
Acquisitions
(2)
8 5 — 13
Balances as of
January 31, 2014 $451 $18,746 $313 $19,510
(1) Fiscal 2013 purchase accounting adjustments primarily relate to the finalization of
the purchase price allocation for the fiscal 2012 acquisition of Massmart.
(2) Goodwill recorded for fiscal 2014 and 2013 acquisitions relates to several acquisitions
that are not significant, individually or in the aggregate, to the Company’s Consolidated
Financial Statements.
Notes to Consolidated Financial Statements