Blackberry 2012 Annual Report Download - page 186

Research In Motion Limited
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Intangible Assets
Intangible assets with definite lives are stated at cost less accumulated amortization and the Company reviews these assets for
impairment when events or changes in circumstances indicate that the carrying amount of the intangible assets might not be
recoverable. The Company is currently amortizing its intangible assets with definite lives over periods generally ranging between two
to ten years.
The useful lives of intangible assets are evaluated quarterly to determine if events or circumstances warrant a revision to their
remaining period of amortization. Legal, regulatory and contractual factors, the effects of obsolescence, demand, competition and
other economic factors are potential indicators that the useful life of an intangible asset may be revised. See “Cautionary Note
Regarding Forwarding-Looking Statements – Risks Related to the Company’s Business and its Industry – Potential charges relating
to the impairment of goodwill or other long-lived assets recorded on RIM’s balance sheet”.
Litigation
The Company is involved in litigation in the normal course of its business. The Company is subject to a variety of claims (including
claims related to patent infringement, purported class actions and other claims in the normal course of business) and may be subject to
additional claims either directly or through indemnities against claims that it provides to certain of its partners and customers.
Management reviews all of the relevant facts for each claim and applies judgment in evaluating the likelihood and, if applicable, the
amount of any potential loss. Where it is considered likely for a material exposure to result and where the amount of the claim is
quantifiable, provisions for loss are made based on management’s assessment of the likely outcome. The Company does not provide
for claims that are considered unlikely to result in a significant loss, claims for which the outcome is not determinable or claims
where the amount of the loss cannot be reasonably estimated. Any settlements or awards under such claims are provided for when
reasonably determinable. For further details on legal matters, see “Legal Proceedings” below.
Royalties
The Company recognizes its liability for royalties in accordance with the terms of existing license agreements. Where license
agreements are not yet finalized, RIM recognizes its current estimates of the obligation in accrued liabilities in the Consolidated
Financial Statements. When the license agreements are subsequently finalized, the estimate is revised accordingly. Management’s
estimates of royalty rates are based on the Company’s historical licensing activities, royalty payment experience and forward-looking
expectations.
Warranty
The Company provides for the estimated costs of product warranties at the time revenue is recognized. BlackBerry devices are
generally covered by a time-limited warranty for varying periods of time. The Company’s warranty obligation is affected by product
failure rates, differences in warranty periods, regulatory developments with respect to warranty obligations in the countries in which
the Company carries on business, freight expense, and material usage and other related repair costs.
16