| Significant Accounting Policies [Text Block] | 2 . SIGNIFICANT ACCOUNTING POLICIES ● Management estimates and reporting The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the periods presented. Actual results could differ from those estimates. Assets and liabilities with reported amounts based on significant estimates include trade accounts receivable, inventory (slow-moving), goodwill, and deferred income taxes. ● Principles of consolidation Our consolidated financial statements include the accounts of Tandy Leather Factory, Inc. and its wholly owned subsidiaries, The Leather Factory, L.P. (a Texas limited partnership) , Tandy Leather Company, L.P. (a Texas limited partnership), Mid-Continent Leather Sales, Inc. (an Oklahoma corporation), Roberts, Cushman & Company, Inc. (a Texas corporation), The Leather Factory of Canada, Ltd. (a Canadian corporation), Tandy Leather Factory UK Limited (a UK corporation), Tandy Leather Factory Australia Pty. Limited (an Australian corporation), and Tandy Leather Factory España, S.L. (a Spanish corporation). All intercompany accounts and transactions have been eliminated in consolidation. ● Foreign currency translation and transactions Foreign currency translation adjustments arise from activities of our foreign subsidiaries. Results of operations are translated into U.S. dollars using the average exchange rates during the period, while assets and liabilities are translated using period-end exchange rates . Foreign currency translation adjustments of assets and liabilities are recorded in stockholders’ equity. Gains and losses resulting from foreign currency transactions are reported in the statements of income under the caption “Other (Income) Expense”, net, for all periods presented. We recognized foreign currency transaction gains of $30,000, $19,000, $24,000, 2017, 2016, 2015, ● Revenue recognition Our sales generally occur via two 1 2 We offer an unconditional satisfaction guarantee to all customers and accept all product returns. Net sales represent gross sales less negotiated price allowances, product returns, and allowances for defective merchandise. ● Discounts We maintain four reported after deduction of discounts. We do not ● Expense categories Cost of goods sold includes inbound freight and duty charges from vendors to our central warehouse, freight and handling charges to move merchandise from our central warehouse to our stores, and manufacturing overhead, as appropriate. Operating expenses include all selling, general and administrative costs including wages and related employee expenses (payroll taxes, health benefits, savings plans, etc.), advertising, outbound freight charges (to ship merchandise to customers), rent, and utilities. ● Property and equipment, net of accumulated depreciation and amortization Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful liv es of the assets, which are three ten seven fifteen five forty ● Inventory Inventory is valued at the lower of cost or net realizable value. In addition, the value of inventory is periodically reduced to net realizable value for slow-moving or obsolete inventory based on management's review of items on hand compared to their estimated future demand. ● Impairment of long-lived assets We evaluate long-lived assets for indicators of impairment whenever events or changes in circumstances indicate their carrying amounts may not ’s carrying value. To date, we have not ● Earnings per share Basic earnings per share are computed based on the weighted average number of common shares outstanding during the period. Diluted earnings per share includes, to the extent inclusion of such shares would be dilutive to earnings per share, the effect of outstanding options and warrants, computed using the treasury stock method. BASIC 2017 2016 2015 Net income $ 4,451,751 $ 6,402,259 $ 6,402,405 Weighted average common shares outstanding 9,242,092 9,301,867 10,077,506 Earnings per share – basic $ 0.48 $ 0.69 $ 0.64 DILUTED Net income $ 4,451,751 $ 6,402,259 $ 6,402,405 Weighted average common shares outstanding 9,242,092 9,301,867 10,077,506 Effect of restricted stock awards and assumed exercise of stock options 14,718 19,691 25,254 Weighted average common shares outstanding, assuming dilution 9,256,810 9,321,558 10,102,760 Earnings per share - diluted $ 0.48 $ 0.69 $ 0.63 Outstanding options and restricted stock awards excluded as anti-dilutive 17,632 31,477 60,433 For additional disclosures regarding the restricted stock awards and the employee stock options, see Note 11. 19,169, 90,085, 68,400 December 31, 2017, 2016, 2015, ● 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. Goodwill is not December 31 December 31, 2017, 2016, 2015 no The only change in our goodwill for 2017 and 2016 $6,748 $2,845, O ur intangible assets and related accumulated amortization consisted of the following: As of December 31, 201 7 Gross Accumulated Amortization Net Trademarks, Copyrights $ 554,369 $ 545,897 $ 8,472 Non-Compete Agreements 175,316 164,566 10,750 $ 729,685 $ 710,463 $ 19,222 As of December 31, 201 6 Gross Accumulated Amortization Net Trademarks, Copyrights $ 554,369 $ 545,279 $ 9,090 Non-Compete Agreements 175,316 163,566 11,750 $ 729,685 $ 708,845 $ 20,840 Excluding goodwill, we have no not $1,618 2017, $6,442 2016, $40,744 2015 15 five 201 8 $ 1,417 201 9 666 20 20 666 202 1 666 2022 666 Thereafter 5,141 ● Fair value of financial Instruments We measure fair value as an exit price, which is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As a basis for considering such assumptions, accounting standards establish a three fair value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value: Level 1 – observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 – include other inputs that are directly or indirectly observable in the marketplace. Level 3 – significant unobservable inputs which are supported by little or no Classification of the financial asset or liability within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. Our principal financial instruments held consist of certificates of deposit, accounts receivable, accounts payable, and long-term debt. The carrying value of certificates of deposit, accounts receivable and accounts payable approximate their fair value due to the relatively short-term nature of the accounts. The terms of the long-term debt are considered reasonable for this type of financing; therefore, the carrying amount approximates fair value. ● Income taxes We account for income taxes using the asset and liability method. Under this method, the amount of taxes currently payable or refundable is accrued, and deferred tax assets and liabilities are recognized for the estimated future tax consequences of temporary differences that currently exist between the tax basis and the financial reporting basis of our assets and liabilities. Deferred tax assets and liabilities are measured using the enacted tax rates in effect in the years when those temporary differences are expected to reverse. The effect on deferred taxes from a change in tax rate is recognized through continuing operations in the period that includes the enactment date of the change. Changes in tax laws and rates could affect recorded deferred tax assets and liabilities in the future. A tax benefit from an uncertain tax position may not not We recognize tax liabilities for uncertain tax positions and adjust these liabilities when our judgment changes as a result of the evaluation of new information not may We may may ● Share-based compensation We have one that expired in March 2017. six no 2017, 2016 2015, not We also have a restricted stock plan that was adopted by our Board of Directors in January 2013 June 2013. 300,000 Awards granted under the plan may may four four ● Comprehensive income Comprehensive income includes net income and certain other items that are recorded directly to Stockholders ’ Equity. The Company’s only source of other comprehensive income is foreign currency translation adjustments. ● Shipping and handling costs All shipping and handling costs incurred by us are included in operating expenses on the statements of income. These costs totaled approximately $1,965,000, $1,982,000, $2,012,000 December 31, 2017, 2016, 2015, ● Advertising With the exception of catalog costs, advertising costs are expensed as incurred. Catalog costs are capitalized and expensed over the estimated useful life of the particular catalog in question, which is typically twelve eighteen Such capitalized costs are included in other current assets and totaled $203,000 $213,000 December 31, 2017 2016, $4,956,000 2017; $4,759,000 2016; $4,826,000 2015. ● Cash flows presentation For purposes of the statement of cash flows, we consider all highly liquid investments with initial maturities of three ● Reclassifications Certain reclassifications have been made to the prior year financial statements to conform to the current year presentation. |
