Best Buy 2011 Annual Report Download - page 87

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$ in millions, except per share amounts or as otherwise noted
2011 was due to a change in the form of vendor contracts that led to a higher proportion of vendor allowances being
classified within cost of goods sold.
Advertising Costs
Advertising costs, which are included in SG&A, are expensed the first time the advertisement runs. Advertising costs consist
primarily of print and television advertisements as well as promotional events. Net advertising expenses were $901, $740
and $765 in fiscal 2011, 2010 and 2009, respectively. Allowances received from vendors for advertising of $98 and
$117, in fiscal 2010 and 2009, respectively, were classified as reductions of advertising expenses. As a result of a change
in the form of vendor contracts, we received no allowances from vendors for advertising expenses that were deemed
specific, incremental and identifiable in fiscal 2011.
Pre-Opening Costs
Non-capital expenditures associated with opening new stores are expensed as incurred.
Stock-Based Compensation
We apply the fair value recognition provisions of accounting guidance as they relate to our stock-based compensation,
which require us to recognize expense for the fair value of our stock-based compensation awards. We elected the
modified prospective transition method as permitted by the share-based payment accounting guidance. Under this
transition method, stock-based compensation expense in fiscal 2011, 2010 and 2009 included: (i) compensation expense
for all stock-based compensation awards granted prior to, but not yet vested as of February 26, 2005, based on the grant
date fair value estimated in accordance with the prior accounting guidance for the treatment of stock-based
compensation; and (ii) compensation expense for all stock-based compensation awards granted subsequent to
February 26, 2005, based on the grant-date fair value estimated in accordance with the provisions of the revised
guidance. We recognize compensation expense on a straight-line basis over the requisite service period of the award (or
to an employee’s eligible retirement date, if earlier). In accordance with the modified prospective transition method,
financial results for prior periods have not been restated.
New Accounting Standards
Consolidation of Variable Interest Entities — In June 2009, the Financial Accounting Standards Board (‘‘FASB’’) issued new
guidance on the treatment of a consolidation of variable interest entities (‘‘VIE’’) in response to concerns about the
application of certain key provisions of pre-existing guidance, including those regarding the transparency of an
involvement with a VIE. Specifically, this new guidance requires a qualitative approach to identifying a controlling financial
interest in a VIE and requires ongoing assessment of whether an entity is a VIE and whether an interest in a VIE makes the
holder the primary beneficiary of the VIE. In addition, this new guidance requires additional disclosures about an
involvement with a VIE and any significant changes in risk exposure due to that involvement. This new guidance is effective
for fiscal years beginning after November 15, 2009. As such, we adopted the new guidance on February 28, 2010 and
determined that it did not have an impact on our consolidated financial position or results of operations.
Transfers of Financial Assets — In June 2009, the FASB issued new guidance on the treatment of transfers of financial
assets which eliminates the concept of a ‘‘qualifying special-purpose entity,’’ changes the requirements for derecognizing
financial assets, and requires additional disclosures in order to enhance information reported to users of financial
statements by providing greater transparency about transfers of financial assets, including securitization transactions, and
an entity’s continuing involvement in and exposure to the risks related to transferred financial assets. This new guidance is
effective for fiscal years beginning after November 15, 2009. As such, we adopted the new guidance on February 28,
2010 and determined that it did not have an impact on our consolidated financial position or results of operations.
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