Logitech 2014 Annual Report Download - page 256

LOGITECH INTERNATIONAL S.A.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Investments
The Company’s investment securities portfolio consists of bank time deposits and marketable securities
related to a deferred compensation plan.
The bank time deposits are classified as cash equivalents and are recorded at cost, which approximates
fair value.
The marketable securities related to the deferred compensation plan are classified as non-current trading
investments, as they are intended to fund the deferred compensation plan long-term liability. Trading activity
is directed by plan participants and is not intended to create short-term gains for the benefit of the Company.
These securities are recorded at fair value based on quoted market prices. Earnings, gains and losses on trading
investments are included in other income (expense), net.
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Additions and improvements are capitalized, and maintenance
and repairs are expensed as incurred. The Company capitalizes the cost of software developed for internal use in
connection with major projects. Costs incurred during the feasibility stage are expensed, whereas direct costs
incurred during the application development stage are capitalized.
Depreciation is provided using the straight-line method. Plant and buildings are depreciated over estimated
useful lives from ten to twenty-five years, equipment over useful lives from three to five years, internal-use software
development over useful lives of three to seven years and leasehold improvements over the lesser of the useful life
of the improvement, up to ten years, or the term of the lease.
When property and equipment is retired or otherwise disposed of, the cost and accumulated depreciation are
relieved from the accounts and the net gain or loss is included in the determination of other income (expense), net.
Valuation of Long-Lived Assets
The Company reviews long-lived assets, such as property and equipment, and finite-lived intangible assets, for
impairment whenever events indicate that the carrying amounts might not be recoverable. Recoverability of property
and equipment, and other finite-lived intangible assets is measured by comparing the projected undiscounted net
cash flows associated with those assets to their carrying values. If an asset is considered impaired, it is written
down to fair value, which is determined based on the asset’s projected discounted cash flows or appraised value,
depending on the nature of the asset. For purposes of recognition of an impairment for assets held for use, the
Company groups assets and liabilities at the lowest level for which cash flows are separately identifiable.
Goodwill and Other Intangible Assets
The Company’s intangible assets principally include goodwill, acquired technology, trademarks, customer
contracts, and customer relationships. Other intangible assets with finite lives, which include acquired technology,
trademarks, customer contracts and customer relationships, and other are recorded at cost and amortized using the
straight-line method over their useful lives ranging from one year to ten years. Intangible assets with indefinite
lives, which include goodwill, are recorded at cost and evaluated at least annually for impairment.
Note 3 — Summary of Significant Accounting Policies (Continued)
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