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This excerpt taken from the AN 10-K filed Feb 24, 2005. Intangible and Long-Lived Assets —
Our policies related to intangible
assets determine the valuation of intangible and long-lived
assets, which is a significant component of our consolidated
balance sheets. Additionally, these policies affect the amount
of future amortization and possible impairment charges we may
incur. Intangible assets consist primarily of the cost of
acquired businesses in excess of the fair value of net assets
acquired, using the purchase method of accounting.
Acquired intangible assets are separately recognized if the benefit of the intangible asset is obtained through contractual or other legal rights, or if the intangible asset can be sold, transferred, licensed, rented, or exchanged, regardless of our intent to do so. Our principal identifiable intangible assets are rights under franchise agreements with vehicle manufacturers. We generally expect our franchise agreements to survive for the foreseeable future, and, when the agreements do not have indefinite terms, anticipate routine renewals of the agreements without substantial cost. We believe that our franchise agreements will contribute to cash flows for the foreseeable future and have indefinite lives. Goodwill and intangibles with indefinite lives are tested for impairment annually at June 30 or more frequently when events or circumstances indicate that impairment may have occurred. We are subject to financial statement risk to the extent that intangible assets become impaired due to decreases in the fair market value of the related underlying business. We estimate the depreciable lives of our property, plant and equipment, including leasehold improvements, and review them for impairment when events or circumstances indicate that their carrying amounts may be impaired. We periodically evaluate the carrying value of assets held-for-sale to determine if, based on market conditions, the values of these assets should be adjusted. Although we believe our property, plant and equipment and assets held-for-sale are appropriately valued, the assumptions and estimates used may change and we may be required to record impairment charges to reduce the value of these assets. 20
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