Best Buy 2012 Annual Report Download - page 59

Download and view the complete annual report

Please find page 59 of the 2012 Best Buy annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 117

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117

59
Description Judgments and Uncertainties Effect if Actual Results Differ From Assumptions
Acquisitions — Purchase Price Allocation
In accordance with accounting guidance for
business combinations, we allocate the
purchase price of an acquired business to its
identifiable assets and liabilities based on
estimated fair values. The excess of the
purchase price over the amount allocated to
the assets and liabilities, if any, is recorded as
goodwill.
We use all available information to estimate
fair values. We typically engage outside
appraisal firms to assist in the fair value
determination of identifiable intangible assets
such as tradenames and any other significant
assets or liabilities. We adjust the preliminary
purchase price allocation, as necessary, up to
one year after the acquisition closing date as
we obtain more information regarding asset
valuations and liabilities assumed.
Our purchase price allocation methodology
contains uncertainties because it requires
management to make assumptions and to
apply judgment to estimate the fair value of
acquired assets and liabilities. Management
estimates the fair value of assets and liabilities
based upon quoted market prices, the carrying
value of the acquired assets and widely
accepted valuation techniques, including
discounted cash flows and market multiple
analyses. Unanticipated events or
circumstances may occur which could affect
the accuracy of our fair value estimates,
including assumptions regarding industry
economic factors and business strategies.
If actual results are materially different than the
assumptions we used to determine fair value of the assets
and liabilities acquired through a business combination, it
is possible that adjustments to the carrying values of such
assets and liabilities will have an impact on our net
earnings.
See Note 4, Acquisitions, to the Notes to Consolidated
Financial Statements, included in Item 8, Financial
Statements and Supplementary Data, of this Annual
Report on Form 10-K, for the acquisition-related
information associated with significant acquisitions
completed in the last three fiscal years.
New Accounting Standards
Goodwill Impairment — In September 2011, the Financial Accounting Standards Board (“FASB”) issued new guidance
simplifying how to test goodwill for impairment. Under the new guidance, entities may make a qualitative assessment of the
likelihood of goodwill impairment in order to determine whether a detailed quantitative analysis is required. This new guidance
is effective for fiscal years and interim periods beginning after December 15, 2011. As such, we will adopt the new guidance in
our fiscal quarter ending May 5, 2012. We do not believe our adoption of the new guidance will have an impact on our
consolidated financial position, results of operations or cash flows.
Comprehensive Income — In June 2011, the FASB issued new guidance on the presentation of comprehensive income.
Specifically, the new guidance requires an entity to present components of net income and other comprehensive income in one
continuous statement, referred to as the statement of comprehensive income, or in two separate, but consecutive statements.
The new guidance eliminates the current option to report other comprehensive income and its components in the statement of
changes in equity. While the new guidance changes the presentation of comprehensive income, there are no changes to the
components that are recognized in net income or other comprehensive income under current accounting guidance. This new
guidance is effective for fiscal years and interim periods beginning after December 15, 2011. As such, we will adopt the new
guidance in our fiscal quarter ending May 5, 2012.
Fair Value Measurement — In April 2011, the FASB issued new guidance to achieve common fair value measurement and
disclosure requirements between GAAP and International Financial Reporting Standards. This new guidance amends current
fair value measurement and disclosure guidance to include increased transparency around valuation inputs and investment
categorization. This new guidance is effective for fiscal years and interim periods beginning after December 15, 2011. As such,
we will adopt the new guidance in our fiscal quarter ending May 5, 2012. We do not believe our adoption of the new guidance
will have an impact on our consolidated financial position, results of operations or cash flows.