Airtran 2009 Annual Report Download - page 77

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Accounts Receivable
Accounts receivable are due primarily from major credit card processors, travel agents, the issuer of co-branded
credit cards, taxing authorities, and municipalities related to guaranteed revenue agreements. We provide an
allowance for doubtful accounts equal to the estimated losses expected to be incurred in the collection of credit
card receivables based on historical credit card charge-backs and of other receivables based on specific analysis.
Collateral is generally not required for accounts receivable. During the years ended December 31, 2009, 2008,
and 2007, we wrote off accounts receivable aggregating $1.0 million, $1.1 million, and $1.0 million,
respectively, against the allowance for doubtful accounts. During the years ended December 31, 2009, 2008,
and 2007, we recorded expense related to allowance for doubtful accounts of $1.2 million, $1.3 million, and
$1.0 million, respectively.
Spare Parts and Supplies
Spare parts and supplies consist of expendable aircraft spare parts and miscellaneous supplies. These items are
stated at cost using the first-in, first-out method. These items are charged to expense when used. Allowances for
obsolescence are provided over the estimated useful life of the related aircraft and engines for spare parts
expected to be on hand at the date aircraft are retired from service. During the years ended December 31, 2009,
2008, and 2007, we recorded expense related to obsolescence reserves of $0.8 million, $0.6 million, and $0.5
million, respectively.
Property and Equipment
Property and equipment is stated on the basis of cost. The estimated salvage values and depreciable lives are
periodically reviewed for reasonableness and revised if necessary. Flight equipment is depreciated to salvage
value of ten percent, using the straight-line method. The estimated useful lives for airframes, engines, and
aircraft parts are 30 years. Other property and equipment is depreciated over three to ten years. Leasehold
improvements are amortized over the economic life of the asset or the lease term, whichever is shorter.
The financial statement carrying value of computer software and equipment, which is included in other property
and equipment on the consolidated balance sheets, was $11.2 million and $14.8 million at December 31, 2009
and 2008, respectively. Depreciation and amortization expense related to computer equipment and software was
$7.9 million, $8.6 million and $6.5 million for the years ended December 31, 2009, 2008, and 2007,
respectively.
Measurement of Impairment of Long-lived Assets
In accordance with the Financial Accounting Standards Board (FASB) Accounting Standards Codification
(ASC) 360 “Property, Plant and Equipment” (Property, Plant and Equipment Topic) we record impairment
losses on long-lived assets used in operations when events or circumstances indicate that the assets may be
impaired, the undiscounted cash flows estimated to be generated by those assets are less than the net book value
of those assets, and the fair value is less than the net book value.
Intangible Assets
Excess of cost over fair value of net assets acquired (goodwill) and indefinite-lived intangibles, such as trade
names, are not amortized but are subject to periodic impairment tests as required by ASC 350 “Intangibles –
Goodwill and Other” (Intangibles - Goodwill and Other Topic). During the second quarter of 2008, because
adverse industry conditions and operating losses were indicators that our intangible assets may have been
impaired, we prepared an assessment and concluded that goodwill was impaired as of June 30, 2008, while our