Enom 2014 Annual Report Download - page 45

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Intangible Assets—Acquired in Business Combinations
We perform valuations of assets acquired and liabilities assumed on each acquisition accounted for as a business combination
and allocate the purchase price of each acquired business to our respective net tangible and intangible assets. Acquired intangible
assets include: trade names, non-compete agreements, owned website names, artist relationships, customer relationships, technology,
media content, and content publisher relationships. We use valuation techniques to value these intangibles assets, with the primary
technique being a discounted cash flow analysis. A discounted cash flow analysis requires us to make various assumptions and
estimates including projected revenue, operating costs, growth rates, useful lives and discount rates. Intangible assets are amortized
over their estimated useful lives using the straight-line method which approximates the pattern in which the economic benefits are
consumed.
Recoverability of Long-lived Assets
We evaluate the recoverability of our long-lived tangible and intangible assets with finite useful lives for impairment when
events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Such trigger events or
changes in circumstances may include: a significant decrease in the market price of a long-lived asset, a significant adverse change in
the extent or manner in which a long-lived asset is being used, a significant adverse change in legal factors or in the business climate,
including those resulting from technology advancements in the industry, the impact of competition or other factors that could affect
the value of a long-lived asset, a significant adverse deterioration in the amount of revenue or cash flows we expect to generate from
an asset group, an accumulation of costs significantly in excess of the amount originally expected for the acquisition or development
of a long-lived asset, current or future operating or cash flow losses that demonstrate continuing losses associated with the use of a
long-lived asset, or a current expectation that, more likely than not, a long-lived asset will be sold or otherwise disposed of
significantly before the end of its previously estimated useful life. We perform impairment testing at the asset group level that
represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. If
events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable and the expected
undiscounted future cash flows attributable to the asset group are less than the carrying amount of the asset group, an impairment loss
equal to the excess of the asset’s carrying value over its fair value is recorded. Fair value is determined based upon estimated
discounted future cash flows, and in light of recent revenue declines we have evaluated certain of our long-lived assets for impairment.
However, we have identified no such impairment losses through December 31, 2014. Assets to be disposed of, if any, are separately
presented on our consolidated balance sheets and reported at the lower of their carrying amount or fair value less costs to sell, and are
no longer depreciated or amortized.
Discontinued Operations
We report the results of operations of a business as discontinued operations if the disposal of a component represents a strategic
shift that has (or will have) a major effect on an entity’s operations and financial results. The results of discontinued operations are
reported in discontinued operations in the consolidated statements of operations for current and prior periods commencing in the
period in which the business meets the criteria of a discontinued operation, and include any gain or loss recognized on closing or
adjustment of the carrying amount to fair value less cost to sell.