Callaway 2014 Annual Report Download - page 80

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F-12
The following table provides a reconciliation of the activity related to the Company’s allowance for doubtful accounts:
Years Ended December 31,
2014 2013 2012
(In thousands)
Beginning balance .......................................................................................................... $ 11,655 $ 6,544 $ 7,263
Provision....................................................................................................................... 2,143 6,798 2,830
Write-off of uncollectible amounts, net of recoveries.................................................. (7,338)(1,687)(3,549)
Ending balance................................................................................................................ $ 6,460 $ 11,655 $ 6,544
Inventories
Inventories are valued at the lower of cost or fair market value. Cost is determined using the first-in, first-out (FIFO)
method. The inventory balance, which includes material, labor and manufacturing overhead costs, is recorded net of an
estimated allowance for obsolete or unmarketable inventory. The estimated allowance for obsolete or unmarketable inventory
is based upon current inventory levels, sales trends and historical experience as well as management’s estimates of market
conditions and forecasts of future product demand, all of which are subject to change.
Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the
straight-line method over estimated useful lives as follows:
Buildings and improvements .......................................................................................................................... 10-30 years
Machinery and equipment............................................................................................................................... 5-10 years
Furniture, computers and equipment .............................................................................................................. 3-5 years
Production molds ............................................................................................................................................ 2-5 years
Normal repairs and maintenance costs are expensed as incurred. Expenditures that materially increase values, change
capacities or extend useful lives are capitalized. The related costs and accumulated depreciation of disposed assets are
eliminated and any resulting gain or loss on disposition is included in net income/(loss). Construction in-process consists
primarily of costs associated with building improvements, machinery and equipment that have not yet been placed into service,
unfinished molds as well as in-process internally developed software.
In accordance with ASC Topic 350-40, “Internal-Use Software,” the Company capitalizes certain costs incurred in
connection with developing or obtaining internal use software. Costs incurred in the preliminary project stage are expensed.
All direct external costs incurred to develop internal-use software during the development stage are capitalized and amortized
using the straight-line method over the remaining estimated useful lives. Costs such as maintenance and training are expensed
as incurred.
Long-Lived Assets
In accordance with ASC Topic 360-10-5, “Impairment or Disposal of Long-Lived Assets”, the Company assesses
potential impairments of its long-lived assets whenever events or changes in circumstances indicate that the asset’s carrying
value may not be recoverable. An impairment charge would be recognized when the carrying amount of a long-lived asset or
asset group is not recoverable and exceeds its fair value. The carrying amount of a long-lived asset or asset group is not
recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of
the asset or asset group.
Goodwill and Intangible Assets
Goodwill and intangible assets, which consist of trade names, trademarks, service marks, trade dress, patents and other
intangible assets, were acquired in connection with the acquisition of Odyssey Sports, Inc. in 1997, FrogTrader, Inc. in 2004,
and certain foreign distributors.
In accordance with ASC Topic 350, “Intangibles—Goodwill and Other,” goodwill and intangible assets with indefinite
lives are not amortized but instead are measured for impairment at least annually or more frequently when events indicate
that an impairment exists. The Company calculates impairment as the excess of the carrying value of goodwill and other