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CKR » Topics » Critical Accounting Policies

These excerpts taken from the CKR 10-K filed Mar 26, 2008.
Critical Accounting Policies
 
Our reported results are impacted by the application of certain accounting policies that require us to make subjective or complex judgments. These judgments involve making estimates about the effect of matters that are inherently uncertain and may significantly impact our consolidated financial position and results of operations. Specific risks associated with these critical accounting policies are described in the following paragraphs.
 
For all of these policies, we caution that future events rarely develop exactly as expected, and the best estimates routinely require adjustment. Our most significant accounting policies require:
 
  •  estimation of future cash flows used to assess the recoverability of long-lived assets and to establish the estimated liability for closed restaurants and subsidizing lease payments of franchisees;
 
  •  estimation, using actuarially determined methods, of our self-insured claim losses under our workers’ compensation, general and auto liability insurance programs;
 
  •  determination of appropriate estimated liabilities for loss contingencies;
 
  •  determination of appropriate assumptions to use in evaluating leases for capital versus operating lease treatment, establishing depreciable lives for leasehold improvements and establishing straight-line rent expense periods;
 
  •  estimation of the appropriate allowances associated with franchisee and licensee receivables;
 
  •  determination of the appropriate assumptions to use to estimate the fair value of share-based compensation; and
 
  •  estimation of our net deferred income tax asset valuation allowance, liabilities related to uncertain tax positions and effective tax rate.
 
Descriptions of these critical accounting policies follow.
 
Critical
Accounting Policies


 



Our reported results are impacted by the application of certain
accounting policies that require us to make subjective or
complex judgments. These judgments involve making estimates
about the effect of matters that are inherently uncertain and
may significantly impact our consolidated financial position and
results of operations. Specific risks associated with these
critical accounting policies are described in the following
paragraphs.


 



For all of these policies, we caution that future events rarely
develop exactly as expected, and the best estimates routinely
require adjustment. Our most significant accounting policies
require:


 












































































  • 
estimation of future cash flows used to assess the
recoverability of long-lived assets and to establish the
estimated liability for closed restaurants and subsidizing lease
payments of franchisees;
 
  • 
estimation, using actuarially determined methods, of our
self-insured claim losses under our workers’ compensation,
general and auto liability insurance programs;
 
  • 
determination of appropriate estimated liabilities for loss
contingencies;
 
  • 
determination of appropriate assumptions to use in evaluating
leases for capital versus operating lease treatment,
establishing depreciable lives for leasehold improvements and
establishing straight-line rent expense periods;
 
  • 
estimation of the appropriate allowances associated with
franchisee and licensee receivables;
 
  • 
determination of the appropriate assumptions to use to estimate
the fair value of share-based compensation; and
 
  • 
estimation of our net deferred income tax asset valuation
allowance, liabilities related to uncertain tax positions and
effective tax rate.


 



Descriptions of these critical accounting policies follow.


 




This excerpt taken from the CKR 10-K filed Mar 30, 2007.
Critical Accounting Policies
 
Our reported results are impacted by the application of certain accounting policies that require us to make subjective or complex judgments. These judgments involve making estimates about the effect of matters that are inherently uncertain and may significantly impact our consolidated financial position and results of operations. Specific risks associated with these critical accounting policies are described in the following paragraphs.
 
For all of these policies, we caution that future events rarely develop exactly as expected, and the best estimates routinely require adjustment. Our most significant accounting policies require:
 
  •  estimation of future cash flows used to assess the recoverability of long-lived assets and to establish the estimated liability for closing restaurants and subsidizing lease payments of franchisees;
 
  •  estimation, using actuarially determined methods, of our self-insured claim losses under our workers’ compensation, general and auto liability insurance programs;
 
  •  determination of appropriate estimated liabilities for loss contingencies;
 
  •  determination of appropriate assumptions to use in evaluating leases for capital versus operating lease treatment, establishing depreciable lives for leasehold improvements and establishing straight-line rent expense periods;
 
  •  estimation of the appropriate allowances associated with franchise and license receivables and liabilities for franchise subleases;


25

Table of Contents

 
CKE RESTAURANTS, INC. AND SUBSIDIARIES
 
Management’s Discussion and Analysis — (Continued)
(Dollars in thousands)

 
  •  determination of the appropriate assumptions to use to estimate the fair value of stock-based compensation; and
 
  •  estimation of our net deferred income tax asset valuation allowance and effective tax rate.
 
Descriptions of these critical accounting policies follow.
 

EXCERPTS ON THIS PAGE:

10-K (2 sections)
Mar 26, 2008
10-K
Mar 30, 2007

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