Cumulative goodwill impairment charges

[Table of Contents](#i16ebb68f4bd84ff99a771b20ec27c3fc_7)component of “Selling, general and administrative expenses” in the accompanying consolidated income statements. We have recorded cumulative goodwill impairment charges totaling $3,040.0 million, all of which relate to the Family Dollar reporting unit.Our annual impairment evaluation of the Family Dollar trade name did not result in impairment charges during fiscal 2021, 2020 or 2019.Revenue RecognitionWe recognize sales revenue, net of estimated returns and sales tax, at the time the customer tenders payment for and takes control of the merchandise.Taxes CollectedWe report taxes assessed by a governmental authority that are directly imposed on revenue-producing transactions (i.e., sales tax) on a net (excluded from revenue) basis.Cost of SalesWe include the cost of merchandise, warehousing and distribution costs, and certain occupancy costs in cost of sales.Vendor AllowancesWe receive vendor support in the form of cash payments or allowances through a variety of reimbursements such as purchase discounts, cooperative advertising, markdowns, scandowns and volume rebates. We have agreements with vendors setting forth the specific conditions for each allowance or payment. We either recognize the allowance as a reduction of current costs or defer the payment over the period the related merchandise is sold. If the payment is a reimbursement for costs incurred, it is offset against those related costs; otherwise, it is treated as a reduction to the cost of merchandise.Pre-Opening CostsWe expense pre-opening costs for new, expanded, relocated and re-bannered stores and for distribution centers, as incurred.Advertising CostsWe expense advertising costs as they are incurred and they are included in “Selling, general and administrative expenses” within the accompanying consolidated income statements. Advertising costs, net of co-op recoveries from vendors, were $93.9 million, $80.8 million and $102.9 million in fiscal 2021, 2020 and 2019, respectively.Income TaxesIncome taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date of such change.We recognize a financial statement benefit for a tax position if we determine that it is more likely than not that the position will be sustained upon examination.We include interest and penalties in the provision for income tax expense and income taxes payable. We do not provide for any penalties associated with tax contingencies unless they are considered probable of assessment.Stock-Based CompensationWe recognize expense for all share-based payments to employees and non-employee directors based on their fair values. Total stock-based compensation expense for 2021, 2020 and 2019 was $79.9 million, $83.9 million and $61.4 million, respectively.We recognize expense related to the fair value of restricted stock units (RSUs) and stock options over the requisite service period on a straight-line basis or a shorter period based on the retirement eligibility of the grantee. The fair value of RSUs is determined using the closing price of our common stock on the date of grant. The fair value of stock option grants is estimated on the date of grant using the Black-Scholes option pricing model. We account for forfeitures when they occur.   
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