MoneyGram 2007 Annual Report Download - page 89

Table of Contents
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
historical trends. Receivables are generally considered past due two days after the contractual remittance schedule, which is typically one
to three days after the sale of the underlying payment instrument. Receivables are evaluated for collectibility and possible write-off by
examining the facts and circumstances surrounding each customer where an account is delinquent and a loss is deemed possible.
Receivables are generally written off against the allowance one year after becoming past due. Following is a summary of activity within
the allowance for losses:
(Amounts in thousands) 2007 2006 2005
Beginning balance at January 1, $ 6,824 $ 13,819 $ 7,930
Charged to expense 8,532 $ 3,931 $ 12,935
Write-offs, net of recoveries (7,337) $ (10,926) $ (7,046)
Ending balance at December 31, $ 8,019 $ 6,824 $ 13,819
Property and Equipment — Property and equipment includes agent equipment, communication equipment, computer hardware, computer
software, leasehold improvements, office furniture and equipment, and signs and is stated at cost, net of accumulated depreciation. The
Company does not own any buildings. Property and equipment is depreciated using a straight-line method over the lesser of assets'
estimated useful lives or lease term. Estimated useful lives by major asset category are generally as follows:
Agent field equipment 3 years
Communication equipment 5 years
Computer hardware 3 years
Computer software Lesser of 5 years or software license/remaining useful life
Leasehold improvements Lesser of the lease term or 10 years
Office furniture and equipment Lesser of the lease term or 7 years
Signage 3 years
The cost and related accumulated depreciation of assets sold or disposed of are removed from the financial statements and the resulting
gain or loss, if any, is recognized under the caption "Occupancy, equipment and supplies" in the Consolidated Statement of (Loss)
Income.
For the years ended December 31, 2007 and 2006, software development costs of $12.5 million and $14.8 million, respectively, were
capitalized in accordance with Statement of Position No. 98-1, Accounting for the Costs of Computer Software Developed or Obtained
for Internal Use. At December 31, 2007 and 2006, there is $38.5 million and $39.9 million, respectively, of unamortized software
development costs included in property and equipment.
Tenant allowances for leasehold improvements are capitalized as leasehold improvements upon completion of the improvement and
depreciated over the shorter of the useful life of the leasehold improvement or the term of the lease. See Note 14 — Commitments and
Contingencies for further discussion.
Intangible Assets and Goodwill — Goodwill represents the excess of the purchase price over the fair value of net assets acquired in
business combinations under the purchase method of accounting. Intangible assets are recorded at cost. Goodwill and intangible assets
with indefinite lives are not amortized, but are instead subject to impairment testing on an annual basis and whenever there is an
impairment indicator. Intangible assets are tested for impairment annually or whenever events or changes in circumstances indicate that
its carrying amount may not be recoverable.
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