Comfort Inn 2014 Annual Report Download - page 76

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Table of Contents
2014 and 2013 totaled $45 thousand and $0.2 million, respectively and is included within other current assets in the accompanying consolidated balance
sheets. The Company includes advertising costs primarily in marketing and reservation expenses on the accompanying consolidated statements of income.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with a maturity of three months or less at the date of purchase to be cash equivalents.
At December 31, 2014 and 2013, the Company had book overdrafts totaling $5.4 million and $5.0 million, respectively which are included in accounts
payable in the accompanying consolidated balance sheets. These book overdrafts represent outstanding checks in excess of funds on deposit.
The Company maintains cash balances in domestic banks, which, at times, may exceed the limits of amounts insured by the Federal Deposit Insurance
Corporation. In addition, the Company also maintains cash balances in international banks which do not provide deposit insurance.
Capitalization Policies
Property and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets. Leasehold
improvements are amortized over the shorter of the lease term or their useful lives. Major renovations and replacements incurred during construction are
capitalized. Additionally, the Company capitalizes any interest incurred during construction of property and equipment or the development of software.
Upon sale or retirement of property, the cost and related accumulated depreciation are eliminated from the accounts and any related gain or loss is recognized
in the accompanying consolidated statements of income. Maintenance, repairs and minor replacements are charged to expense as incurred.
Costs for computer software developed for internal use are capitalized during the application development stage and depreciated using the straight-line
method over the estimated useful lives of the software.
Leased property meeting certain capital lease criteria is capitalized and the present value of the related lease payments is recorded as a liability. The
present value of the minimum lease payments are calculated utilizing the lower of the Company’s incremental borrowing rate or the lessor’s interest rate
implicit in the lease, if known by the Company. Amortization of capitalized leased assets is computed utilizing the straight-line method over either the
shorter of the estimated useful life of the asset or the initial lease term and included in depreciation and amortization in the Company's consolidated
statements of income. However, if the lease meets the bargain purchase or transfer of ownership criteria the asset shall be amortized in accordance with the
Company’s normal depreciation policy for owned assets.
Assets Held for Sale
The Company considers property to be assets held for sale when all of the following criteria are met:
• Management commits to a plan to sell an asset;
• It is unlikely that the disposal plan will be significantly modified or discontinued;
• The asset is available for immediate sale in its present condition;
• Actions required to complete the sale of the asset have been initiated;
• Sale of the asset is probable and the Company expects the completed sale will occur within one year; and
• The asset is actively being marketed for sale at a price that is reasonable given its current market value.
Upon designation as an asset held for sale, the Company records the carrying value of each asset at the lower of its carrying value or its estimated fair
value, less estimated costs to sell, and ceases recording depreciation. If at any time these criteria are no longer met, subject to certain exceptions, the assets
previously classified as held for sale are reclassified as held and used and measured individually at the lower of the following:
a. the carrying amount before the asset was classified as held for sale, adjusted for any depreciation (amortization) expense that would have
been recognized had the asset been continuously classified as held and used;
b. the fair value at the date of the subsequent decision not to sell.
Valuation of Intangibles and Long-Lived Assets
The Company evaluates the potential impairment of property and equipment and other long-lived assets, including franchise rights and other definite-
lived intangibles, whenever an event or other circumstances indicates that the Company may not be able to recover the carrying value of the asset. When
indicators of impairment are present, recoverability is assessed
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