Autodesk 2012 Annual Report Download - page 124

intangible assets by comparing their carrying amounts to future undiscounted cash flows the assets are expected to generate. If
certain identifiable intangibles are considered to be impaired, the impairment to be recognized equals the amount by which the
carrying value of the assets exceeds its fair value. There was no impairment of long-lived assets during the years ended
January 31, 2012 and 2011.
In addition to the recoverability assessments, Autodesk routinely reviews the remaining estimated useful lives of its long-
lived assets. Any reduction in the useful life assumption will result in increased depreciation and amortization expense in the
quarter when such determinations are made, as well as in subsequent quarters.
Deferred Tax Assets
Deferred tax assets arise primarily from tax credits, net operating losses, and timing differences for reserves, accrued
liabilities, stock options, purchased technologies and capitalized intangibles, partially offset by the establishment of U.S.
deferred tax liabilities on unremitted earnings from certain foreign subsidiaries, deferred tax liabilities associated with tax
method change on advance payments, and a valuation allowance against California and Canadian deferred tax assets. They are
measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are
expected to reverse. Valuation allowances are established when necessary to reduce gross deferred tax assets to the amount
“more likely than not” expected to be realized.
Revenue Recognition
Autodesk recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have
been rendered, the price is fixed or determinable, and collection is probable. For multiple element arrangements, Autodesk
allocates the sales price among each of the deliverables using the residual method, under which revenue is allocated to
undelivered elements based on their vendor-specific objective evidence (“VSOE”) of fair value. VSOE is the price charged
when an element is sold separately or a price set by management with the relevant authority. If Autodesk does not have VSOE
of an undelivered software license, revenue recognition is deferred on the entire sales arrangement until all elements for which
Autodesk does not have VSOE are delivered. If Autodesk does not have VSOE for undelivered maintenance or services, the
revenue for the arrangement is recognized over the longest contractual service period in the arrangement. Revenue recognition
for significant lines of business is discussed further below.
Autodesk’s assessment of likelihood of collection is also a critical element in determining the timing of revenue
recognition. If collection is not probable, the revenue will be deferred until the earlier of when collection is deemed probable or
cash is received.
License and other revenue are comprised of two components: (1) all forms of product license revenue and (2) other
revenue:
(1) All Forms of Product License Revenue
Product license revenue includes: software license revenue from the sale of new seat licenses, upgrades, product
revenue for Creative Finishing and revenue from on-demand collaboration software and services. Autodesk’s
existing customers who are using a currently supported version of a product can upgrade to the latest release of the
product by paying a separate fee at current available prices. An existing customer also has the option to upgrade to a
different product, which generally has a higher price, for a premium fee.
Autodesk’s product license revenue from distributors and resellers is generally recognized at the time title to
Autodesk’s product passes to the distributor or reseller, provided all other criteria for revenue recognition are met.
Autodesk establishes reserves for product returns based on historical experience of actual product returns,
estimated channel inventory levels, the timing of new product introductions, channel sell-in for applicable markets
and other factors. These reserves are recorded as a direct reduction of revenue and accounts receivable at the time
the related revenue is recognized.
(2) Other Revenue
Other revenue includes revenue from consulting, training, Autodesk Developers Network and Creative
Finishing customer support, and is recognized over time, as the services are performed.
Maintenance revenue consists of revenue from the Company’s maintenance program. Under this program, customers are
eligible to receive unspecified upgrades when-and-if-available, downloadable training courses and on-line support. Autodesk
recognizes maintenance revenue from its maintenance program ratably over the maintenance service contract periods.
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