XML 25 R8.htm IDEA: XBRL DOCUMENT
v2.4.0.8

Note 1 - Basis of Presentation and Certain Significant Accounting Policies | 9 Months Ended
--- | ---
Sep. 30, 2014
Disclosure Text Block [Abstract] |
Basis of Presentation and Significant Accounting Policies [Text Block] | 1. BASIS OF PRESENTATION AND CERTAIN SIGNIFICANT ACCOUNTING POLICIES In the opinion of management, the accompanying consolidated financial statements for Tandy Leather Factory, Inc. and its consolidated subsidiaries contain all adjustments (consisting of normal recurring adjustments) necessary to present fairly its financial position as of September 30, 2014 and December 31, 2013, and its results of operations and cash flows for the three and/or nine-month periods ended September 30, 2014 and 2013. Operating results for the three and nine-month periods ended September 30, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2013. The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Inventory. Inventory is stated at the lower of cost or market and is accounted for on the “first in, first out” method. Based on negotiations with vendors, title generally passes to us when merchandise is put on board. Merchandise to which we have title but which we have not yet received is recorded as inventory in transit. In addition, the value of inventory is periodically reduced for slow-moving or obsolete inventory based on management's review of items on hand compared to their estimated future demand. The components of inventory consist of the following:
|  | As of |
|  | September 30, 2014 |  |  | December 31, 2013 |
Inventory on hand: |  |  |  |  |  |  |  |
Finished goods held for sale |  | $ | 36,593,039 |  |  | $ | 24,546,771 |
Raw materials and work in process |  |  | 1,196,573 |  |  |  | 853,200 |
Inventory in transit |  |  | 1,575,592 |  |  |  | 900,859 |
|  | $ | 39,365,204 |  |  | $ | 26,300,830 |
Goodwill and Other Intangibles. Goodwill represents the excess of the purchase price over the fair value of net assets acquired in a business combination. Goodwill is required to be evaluated for impairment on an annual basis, absent indicators of impairment during the interim. Application of the goodwill impairment test requires exercise of judgment, including the estimation of future cash flows, determination of appropriate discount rates and other important assumptions. Changes in these estimates and assumptions could materially affect the determination of fair value and/or goodwill impairment for each reporting unit. A two-step process is used to test for goodwill impairment. The first phase screens for impairment, while the second phase (if necessary) measures the impairment. We have elected to perform the annual analysis during the fourth calendar quarter of each year. As of December 31, 2013, management determined that the present value of the discounted estimated future cash flows of the stores associated with the goodwill is sufficient to support their respective goodwill balances. No indicators of impairment were identified during the first nine months of 2014. A summary of changes in our goodwill for the periods ended September 30, 2014 and 2013 is as follows:
|  | Leather Factory |  |  | Tandy Leather |  |  | Total |
Balance, December 31, 2012 |  | $ | 607,319 |  |  | $ | 383,406 |  |  | $ | 990,725 |
Acquisitions and adjustments |  |  | - |  |  |  | - |  |  |  | - |
Foreign exchange gain/loss |  |  | (4,572 | ) |  |  | - |  |  |  | (4,572 | )
Impairments |  |  | - |  |  |  | - |  |  |  | - |
Balance, September 30, 2013 |  | $ | 602,747 |  |  | $ | 383,406 |  |  | $ | 986,153 |
|  | Leather Factory |  |  | Tandy Leather |  |  | Total |
Balance, December 31, 2013 |  | $ | 598,579 |  |  | $ | 383,406 |  |  | $ | 981,985 |
Acquisitions and adjustments |  |  | - |  |  |  | - |  |  |  | - |
Foreign exchange gain/loss |  |  | (6,328 | ) |  |  | - |  |  |  | (6,328 | )
Impairments |  |  | - |  |  |  | - |  |  |  | - |
Balance, September 30, 2014 |  | $ | 592,251 |  |  | $ | 383,406 |  |  | $ | 975,657 |
Other intangibles consist of the following:
|  | As of September 30, 2014 |  |  | As of December 31, 2013 |
|  | Gross |  |  | Accumulated Amortization |  |  | Net |  |  | Gross |  |  | Accumulated Amortization |  |  | Net |
Trademarks, Copyrights |  | $ | 544,369 |  |  | $ | 510,815 |  |  | $ | 33,554 |  |  | $ | 544,369 |  |  | $ | 487,891 |  |  | $ | 56,478 |
Non-Compete Agreements |  |  | 179,768 |  |  |  | 144,018 |  |  |  | 35,750 |  |  |  | 181,216 |  |  |  | 134,466 |  |  |  | 46,750 |
|  | $ | 724,137 |  |  | $ | 654,833 |  |  | $ | 69,304 |  |  | $ | 725,585 |  |  | $ | 622,357 |  |  | $ | 103,228 |
We recorded amortization expense of $33,924 during the first nine months of 2014 compared to $30,890 during the same period of 2013. All of our intangible assets are subject to amortization under U.S. GAAP. Based on the current amount of intangible assets subject to amortization, the estimated amortization expense for each of the succeeding 5 years is as follows:
|  | Wholesale Leathercraft |  |  | Retail Leathercraft |  |  | Total |
2014 |  | $ | 198 |  |  | $ | 45,004 |  |  | $ | 45,202 |
2015 |  |  | 108 |  |  | $ | 40,302 |  |  | $ | 40,410 |
2016 |  |  | 108 |  |  |  | 5,667 |  |  |  | 5,775 |
2017 |  |  | 90 |  |  |  | 1,000 |  |  |  | 1,090 |
2018 |  |  | - |  |  |  | 750 |  |  |  | 750 |
Revenue Recognition. Our sales generally occur via two methods: (1) at the counter in our stores, and (2) shipment by common carrier. Sales at the counter are recorded and title passes as transactions occur. Otherwise, sales are recorded and title passes when the merchandise is shipped to the customer. Our shipping terms are FOB shipping point. We offer an unconditional satisfaction guarantee to our customers and accept all product returns. Net sales represent gross sales less negotiated price allowances, product returns, and allowances for defective merchandise. Comprehensive Income (loss) and Accumulated Other Comprehensive Income (loss). Comprehensive income (loss) is defined as the change in equity during a period from transactions and other events and circumstances from non-stockholder sources and includes all changes in equity during a period except those resulting from investments by and dividends to stockholders. Our comprehensive income (loss) consists of our net income and foreign currency translation adjustments from our international operations. Recent Account ing Pronouncements. In July 2013, the Financial Accounting Standards Board (“FASB”) issued ASU 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or Tax Credit Carryforward Exists” to eliminate the diversity in practice associated with the presentation of unrecognized tax benefits in instances where a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. ASU 2013-11 generally requires an unrecognized tax benefit, or a portion of an unrecognized tax benefit, to be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except in certain circumstances. The amendments in ASU 2013-11 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The adoption of this standard did not have a material impact on our consolidated financial statements. In April 2014, FASB issued Accounting Standards Update 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. Under the new guidance, a disposal of a component of an entity or a group of components of an entity is required to be reported in discontinued operations only if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results. This guidance also changes an entity’s requirements when presenting, for each comparative period, the assets and liabilities of a disposal group that includes a discontinued operation. A discontinued operation may include a component of an entity, or a business or nonprofit activity. The guidance is effective for interim and annual reporting periods beginning after December 15, 2014. The adoption of the new requirements is not expected to have a material impact on our consolidated earnings, financial position or cash flows. In May 2014, FASB issued Accounting Standards Update 2014-09 which creates a new topic in the Accounting Standards Codification (“ASC”) Topic 606, “Revenue From Contracts With Customers.” In addition to superseding and replacing nearly all existing U.S. GAAP revenue recognition guidance, including industry-specific guidance, ASC 606 establishes a new control-based revenue recognition model; changes the basis for deciding when revenue is recognized over time or at a point in time; provides new and more detailed guidance on specific topics; and expands and improves disclosures about revenue. In addition, ASU 2014-09 adds a new Subtopic to the Codification, ASC 340-40, “Other Assets and Deferred Costs: Contracts with Customers,” to provide guidance on costs related to obtaining a contract with a customer and costs incurred in fulfilling a contract with a customer that are not in the scope of another ASC Topic. The guidance is effective for interim and annual reporting periods beginning after December 15, 2016. Companies are permitted to apply the guidance in ASC 606 using one of the following two methods: retrospectively to each prior period presented in accordance with ASC 250, subject to certain practical expedients; or retrospectively with a cumulative effect adjustment to opening retained earnings in the period of initial adoption. If applying this transition method, an entity should apply the new revenue recognition guidance only to contracts not completed under existing U.S. GAAP at the date of adoption. We are currently evaluating the adoption method to apply and the impact that the update will have on its financial position, results of operations, cash flows and financial statement disclosures.

X
- Definition The entire disclosure for the basis of presentation and significant accounting policies concepts. Basis of presentation describes the underlying basis used to prepare the financial statements (for example, US Generally Accepted Accounting Principles, Other Comprehensive Basis of Accounting, IFRS). Accounting policies describe all significant accounting policies of the reporting entity. + References No definition available. + Details
Name: | us-gaap_BasisOfPresentationAndSignificantAccountingPoliciesTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Details
Name: | us-gaap_DisclosureTextBlockAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration