Avid 2015 Annual Report Download - page 76

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70
Property and Equipment
Property and equipment is recorded at cost and depreciated using the straight-line method over the estimated useful life of the asset.
The Company typically depreciates its property and equipment using the following minimum and maximum useful lives:
Depreciable Life (years)
Minimum Maximum
Computer and video equipment and software, including internal use software 2 5
Manufacturing tooling and testbeds 3 5
Office equipment 3 5
Furniture, fixtures and other 3 8
The Company capitalizes certain development costs incurred in connection with its internal use software. Costs incurred in the
preliminary stages of development are expensed as incurred. Once an application has reached the development stage, internal and
external costs, if direct, are capitalized until the software is substantially complete and ready for its intended use. Capitalized costs are
recorded as part of property and equipment. Maintenance and training costs are expensed as incurred. Internal use software is
amortized on a straight line basis over its estimated useful life, generally three years.
Leasehold improvements are amortized over the shorter of the useful life of the improvement or the remaining term of the lease.
Expenditures for maintenance and repairs are expensed as incurred. Upon retirement or other disposition of assets, the cost and
related accumulated depreciation are eliminated from the accounts and the resulting gain or loss is reflected in other (expense) income
in the results of operations.
Acquisition-Related Intangible Assets and Goodwill
Acquisition-related intangible assets consist of customer relationships, developed technology, trade names and non-compete
agreements. These assets are determined to have either finite or indefinite lives. For finite-lived intangible assets amortization is
straight-line over the estimated useful lives of such assets, which are generally two years to twelve years. Straight-line amortization is
used because the Company cannot reliably determine a discernible pattern over which the economic benefits would be realized. The
Company does not have any indefinite-lived intangible assets. Intangible assets are tested for impairment when events and
circumstances indicate there is an impairment. The impairment test involves comparing the sum of undiscounted cash flows to the
carrying value as of the measurement date. Impairment occurs when the carrying value of the assets exceeds the sum of undiscounted
cash flows. Impairment is then measured as the difference between the carrying value and fair value determined using a discounted
cash flow method. In estimating the fair value using a discounted cash flow method, the Company uses assumptions that include
forecast revenues, gross margins, operating profit margins, growth rates and long term discount rates, all of which require significant
judgment by management. Changes to these assumptions could affect the estimated fair value of the intangible asset and could result
in an impairment charge in future.
The Company performs its annual and interim goodwill impairment tests when it is more likely than not that a goodwill impairment
exists. The Company has concluded it has one reporting unit and the annual measurement date is October 31, 2015.
Long-Lived Assets
The Company periodically evaluates its long-lived assets for events and circumstances that indicate a potential impairment. A long-
lived asset is assessed for impairment when the undiscounted expected future cash flows derived from that asset are less than its
carrying value. The cash flows used for this analysis take into consideration a number of factors including past operating results,
budgets and economic projections, market trends and product development cycles. The amount of any impairment would be equal to
the difference between the estimated fair value of the asset, based on a discounted cash flow analysis, and its carrying value.
Advertising Expenses
All advertising costs are expensed as incurred and are classified as marketing and selling expenses. Advertising expenses were not
material in the periods presented.