Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2013

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

1.       Summary of Significant Accounting Policies

Organization and Basis of Presentation

The consolidated financial statements include Stanley Furniture Company, Inc. and our wholly owned subsidiaries.  All significant inter-company accounts and transactions have been eliminated.  We are a leading designer, manufacturer and importer of wood furniture exclusively targeted at the premium price range of the residential market.

         For financial reporting purposes, we operate in one reportable segment where substantially all revenues are from the sale of residential wood furniture products.  This reportable segment consists of two product lines that are branded as Stanley Furniture and Young America.  Sales from these two groups of products for the three years ended are as follows:

	2013	2012	2011
Stanley Furniture	60%	62%	56%
Young America	40%	38%	44%
Total net sales	100%	100%	100%

            Subsequent events were evaluated through the date these financial statements were issued.

Cash Equivalents

            Cash and short-term, highly-liquid investments with original maturities of three months or less are considered cash and cash equivalents.

Short-term Investments

            Investments with maturities of greater than three months and less than one year at the time of purchase are considered short-term investments.  Our investments are in certificates of deposits, which we intend to hold until maturity.  We report the investments at cost with earnings recognized through interest income.

Revenue Recognition

            Sales are recognized when title and risk of loss pass to the customer, which typically occurs at the time of shipment.  In some cases however, title does not pass until the shipment is delivered to the customer.  Revenue includes amounts billed to customers for shipping.

Inventories

            Inventories are valued at the lower of cost or market.  Cost for all inventories is determined using the first-in, first-out (FIFO) method.

Property, Plant and Equipment

     Depreciation of property, plant and equipment is computed using the straight-line method based upon the estimated useful lives.  Gains and losses related to dispositions and retirements are included in income.  Maintenance and repairs are charged to income as incurred; renewals and betterments are capitalized.  Assets are reviewed for possible impairment when events indicate that the carrying amount of an asset may not be recoverable.  Assumptions and estimates used in the evaluation of impairment may affect the carrying value of property, plant and equipment, which could result in impairment charges in future periods.  Depreciation policy reflects judgments on the estimated useful lives of assets.

Capitalized Software Cost

            We amortize purchased computer software costs using the straight-line method over the estimated economic lives of the related products.  Unamortized cost at December 31, 2013 and 2012 was approximately $4.9 million and $2.8 million, respectively, and is included in other assets.

Income Taxes

            Deferred income taxes are determined based on the difference between the consolidated financial statement and income tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse.  Deferred tax expense represents the change in the deferred tax asset/liability balance. Income tax credits are reported as a reduction of income tax expense in the year in which the credits are generated.  A valuation allowance is recorded when it is more likely than not that a deferred tax asset will not be realized.  Interest and penalties on uncertain tax positions are recorded as income tax expense.

Fair Value of Financial Instruments

            Accounting for fair value measurements requires disclosure of the level within the fair value hierarchy in which fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets or liabilities (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3).  The fair value of trade receivables, trade payables and letters of credit approximate the carrying amount because of the short maturity of these instruments.

Earnings per Common Share

            Basic earnings per share is computed based on the average number of common shares outstanding.  Diluted earnings per share includes any dilutive effect of outstanding stock options and restricted stock calculated using the treasury stock method.

Stock-Based Compensation

We record share-based payment awards at fair value on the grant date of the awards, based on the estimated number of awards that are expected to vest.  The fair value of stock options was determined using the Black-Scholes option-pricing model.  The fair value of the restricted stock awards was based on the closing price of the Company’s common stock on the date of the grant.

Use of Estimates

            The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.  Changes in such estimates may affect amounts reported in future periods.

New Accounting Pronouncements

            In July 2013, the Financial Accounting Standards Board issued Accounting Standards Update No. 2013-11, “Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists,” for fiscal years, and interim periods within those years, beginning after December 15, 2013.  We will adopt this guidance as required in first quarter of 2014.  The adoption of this update will not have a material effect on our statements of operations, financial position or cash flows.