Green Dot 2010 Annual Report Download - page 72

Note 2 — Summary of Significant Accounting Policies (continued)
benefit of our customers totaled $251.8 million and $194.1 million, respectively, of which $9.4 million and
$19.8 million, respectively, related to funds for prepaid debit cards and cash transfer products that had not
yet been activated by the customers.
Accounts Receivable, Net
Accounts receivable is comprised principally of receivables due from card issuing banks, overdrawn
account balances due from cardholders, trade accounts receivable and other receivables. We record
accounts receivable net of reserves for estimated uncollectible accounts. Receivables due from card
issuing banks primarily represent revenue-related funds collected by the card issuing banks from our retail
distributors, merchant banks and cardholders that have yet to be remitted to us. These receivables are
generally collected within a short period of time based on the remittance terms in our agreements with the
card issuing banks.
Overdrawn Account Balances Due from Cardholders and Reserve for Uncollectible Overdrawn
Accounts
Cardholder account overdrafts may arise from maintenance fee assessments on our GPR cards or
from purchase transactions that we honor on GPR or gift cards, in each case in excess of the funds in a
cardholder’s account. We are exposed to losses from unrecovered cardholder account overdrafts. We
establish a reserve for uncollectible overdrawn accounts. We classify overdrawn accounts into age groups
based on the number of days that have elapsed since an account has had activity, such as a purchase,
ATM transaction or maintenance fee assessment. We calculate a reserve factor for each age group based
on the average recovery rate for the most recent six months. These factors are applied to these age groups
to estimate our overall reserve. When more than 90 days have passed without activity in an account, we
consider recovery to be remote and write off the full amount of the overdrawn account balance. We include
our provision for uncollectible overdrawn accounts related to maintenance fees as an offset to card
revenues in the accompanying consolidated statements of operations. We include our provision for
uncollectible overdrawn accounts related to purchase transactions in other general and administrative
expenses in the accompanying consolidated statements of operations.
Property and Equipment
We carry our property and equipment at cost less accumulated depreciation and amortization. We
generally compute depreciation on property and equipment using the straight-line method over the
estimated useful lives of the assets, except for internal-use software in development, which is not
depreciated. We generally compute amortization on tenant improvements using the straight-line method
over the shorter of the related lease term or estimated useful lives of the improvements. We expense
expenditures for maintenance and repairs as incurred.
The estimated useful lives of the respective classes of assets are as follows:
Computer equipment, furniture and office
equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3-4 years
Computer software purchased . . . . . . . . . . . . . . 3 years
Capitalized internal-use software . . . . . . . . . . . . 2 years
Tenant improvements . . . . . . . . . . . . . . . . . . . . . Shorter of the useful life or the lease term
We capitalize certain internal and external costs incurred to develop internal-use software during the
application development stage. We also capitalize the cost of specified upgrades and enhancements to
internal-use software that result in additional functionality. Once a development project is substantially
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GREEN DOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)