Hertz 2014 Annual Report Download - page 123

Table of Contents
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Cash and Cash Equivalents
Cash and cash equivalents include cash on hand and highly liquid investments with an original maturity of three months or less.
Restricted Cash and Cash Equivalents
Restricted cash and cash equivalents includes cash and cash equivalents that are not readily available for the Company's normal disbursements.
Restricted cash and cash equivalents are restricted for the purchase of revenue earning vehicles and other specified uses under the Company's
Fleet Debt facilities, for its Like-Kind Exchange Program, or LKE Program and to satisfy certain of its self-insurance regulatory reserve
requirements. These funds are primarily held in highly rated money market funds with investments primarily in government and corporate
obligations.
Receivables
Receivables are stated net of allowances and primarily represent credit extended to car manufacturers and customers that satisfy defined credit
criteria. The estimate of the allowance for doubtful accounts is based on the Company's historical experience and its judgment as to the likelihood
of ultimate payment. Actual receivables are written-off against the allowance for doubtful accounts when the Company determines the balance will
not be collected. Estimates for future credit memos are based on historical experience and are reflected as reductions to revenue, while bad debt
expense is reflected as a component of "Direct Operating" in the consolidated statements of operations.
Property and Equipment
Property and equipment are stated at cost and are depreciated utilizing the straight-line method over the estimated useful lives of the related
assets. Useful lives are as follows:
Buildings 5 to 50 years
Furniture and fixtures 1 to 15 years
Service cars and service equipment 1 to 13 years
Leasehold improvements The lesser of the economic life or the lease term
The Company follows the practice of charging maintenance and repairs, including the cost of minor replacements, to maintenance expense. Costs
of major replacements of units of property are capitalized to property and equipment accounts and depreciated.
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During the second quarter 2014, the Company terminated a business relationship. As a result, the Company performed an analysis of the assets
associated with the terminated business relationship and wrote-off the assets in the amount of $10 million.
During the third quarter 2014, the Company deemed its previous corporate headquarters building to be held for sale. As a result, the Company
determined the fair value of the building and recorded an impairment charge of $13 million.
During the fourth quarter 2014, the Company wrote-down $14 million of service equipment that was deemed to not have a future useful life in its
operations.
Fair Value Measurements
Generally accepted accounting principles define fair value as the price that would be received to sell an asset or be paid to transfer a liability in an
orderly transaction between market participants at the measurement date (exit price) and establishes a fair value hierarchy that prioritizes the
inputs used to measure fair value using the following definitions (from highest to lowest priority):
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Source: HERTZ GLOBAL HOLDINGS INC, 10-K, July 16, 2015 Powered by Morningstar® Document Research℠
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