OSHKOSH CORPORATION NOTES OF CONSOLIDATED FINANCIAL STATEMENTS
Purchased Intangible Assets — At acquisition, the Company estimates and records the fair values of purchased intangible assets, which primarily consist of trade names, customer relationships and technology. The fair values of purchased intangible assets are estimated principally based on projections of cash flows that will arise from identifiable intangible assets of acquired businesses, which include estimates of discount rates, revenue growth rates, EBITDA, royalty rates, customer attrition rates and technology obsolescence rates. Amortizable purchased intangible assets are amortized on a straight-line basis over their estimated useful lives. Certain of the Company's trade names are considered to be indefinite-lived and therefore are not amortized. Non- amortizable trade names are assessed for impairment annually and as triggering events or “indicators of potential impairment” occur. The Company performs its annual impairment test at the beginning of the fourth quarter of each year. The Company assesses the non-amortizable trade names for impairment by estimating their fair values using the “relief-from- royalty” method. When the fair value of the non-amortizable trade name is less than the carrying value of the trade name, an impairment is recognized for the difference between the fair value and the carrying value of the trade name, limited to its carrying value. Impairment of Other Long-Lived Assets — Property, plant and equipment, right-of-use lease assets and amortizable intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the sum of the expected undiscounted cash flows is less than the carrying value of the related asset or group of assets, an impairment is recognized for the difference between the fair value and carrying value of the asset or group of assets. Leases — The Company leases certain real estate, information technology equipment, warehouse equipment, vehicles and other equipment through leases. The Company determines whether an arrangement contains a lease at inception. A lease liability and corresponding right-of-use asset are recognized for qualifying leased assets based on the present value of fixed and certain index-based lease payments at lease commencement. Variable payments, which are generally determined based on the usage rate of the underlying asset, are excluded from the present value of lease payments and are recognized in the period in which the payment is made. To determine the present value of lease payments, the Company uses the stated interest rate in the lease, when available, or more commonly a secured incremental borrowing rate that reflects risk, term and economic environment in which the lease is denominated. The incremental borrowing rate is determined using a portfolio approach based on the current rate of interest that the Company would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term. The Company has elected not to separate payments for lease components from payments for non-lease components in contracts that contain both components. Lease agreements may include options to extend or terminate the lease. Those options that are reasonably certain of exercise at lease commencement have been included in the term of the lease used to recognize the right-of-use assets and lease liabilities. The lease terms of the Company’s real estate and equipment leases each extend up to 21 years. The Company has elected not to recognize right-of-use assets or lease liabilities for leases with a term of twelve months or less. Expense is recognized on a straight-line basis over the lease term for operating leases and the effective interest method for finance leases. Customer Advances — Customer advances include amounts received in advance of the completion of goods or services. Certain advances in the Vocational segment bear interest at fixed rates determined at the time of the advance. Other Non-current Liabilities — Other non-current liabilities are comprised principally of the portions of the Company’s lease liabilities, unrecognized tax benefits, pension and other post-employment benefit liabilities, accrued warranty and accrued product liability that are not expected to be settled in the subsequent twelve-month period. Foreign Currency Translation — All balance sheet accounts have been translated into U.S. dollars using the exchange rates in effect at the balance sheet date. Income statement amounts have been translated using the average exchange rate during the period in which the transactions occurred. Resulting translation adjustments are included in “Other comprehensive income (loss).” Foreign currency transaction gains or losses are included in “Miscellaneous, net” in the Consolidated Statements of Income. The Company recorded a net foreign currency transaction loss of $1.9 million and $2.8 million in 2025 and 2024, respectively, and a net foreign currency transaction gain of $4.7 million in 2023.
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