Incredimail 2011 Annual Report Download - page 102

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PERION NETWORK LTD. AND ITS SUBSIDIARIES
(Formerly: Incredimail Ltd.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 3:
-
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
Intangible assets that are not considered to have an indefinite useful life are amortized over their estimated useful lives, which range from 3 to
10.25 years. The acquired customer arrangements are amortized over their estimated useful lives in proportion to the economic benefits
realized. This accounting policy results in accelerated amortization of such customer arrangements as compared to the straight-
line method.
Other intangible assets consist primarily of technology and trade names and are amortized over their estimated useful lives on a straight-
line
basis.
i.
Revenue recognition:
The Company generates revenues from search related advertising, receiving a share of the advertising revenues from companies providing
search capabilities. In addition, the Company offers advertisers the ability to place text-
based ads on its home page and website and banners in
its email clients. Advertisers are charged monthly based on the number of times a user clicks on one of the ads. The Company recognizes
revenue from advertisement at that time.
In addition, the Company also derives revenues from: (i) product sales (ii) other. Revenues from products include licensing the right to use its
email software, content database, photo sharing and social expression product and e-
mail anti spam. Revenues from other services include
search related advertising and other advertising.
In accordance with ASC 605-
50, "Customer Payments and Incentives", the Company accounts for cash consideration given to customers, for
whom it does not receive a separately identifiable benefit or cannot, reasonably estimate fair value, as a reduction of revenue rather than as an
expense.
Revenues from software license products are recognized when all criteria outlined in ASC 985-605, "Software -
Revenue Recognition" are met.
Revenues from software license products are recognized when persuasive evidence of an agreement exists, delivery of the product has
occurred, the fee is fixed or determinable, and collectability is probable. Company's e-
mail product users may also purchase a license to its
content database. This content database provides additional Perion Network content files in the form of email background, animation sounds,
graphics and e-
mail notifies. Content database licensing fees are recognized over the license period. Lifetime licensing revenues are recognized
over the estimated usage period of the content database. In accordance with its policy, the Company reviews the estimated usage period of the
lifetime licensing on an ongoing basis.
Revenues from email anti-
spam license fees, photo sharing, social expression product and service are recognized ratably over the term of the
license.
F
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15