MoneyGram 2009 Annual Report Download - page 92

Table of Contents
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Intangible Assets and Goodwill — Goodwill represents the excess of the purchase price over the fair value of net assets acquired in
business combinations and is assigned to the reporting unit in which the acquired business will operate. Intangible assets are recorded at
their estimated fair value at the date of acquisition or at cost if internally developed. Goodwill and intangible assets with indefinite lives
are not amortized, but are instead subject to impairment testing. Intangible assets with finite lives are amortized using a straight-line
method over their respective useful lives as follows:
Customer lists 3-15 years
Patents 15 years
Non-compete agreements 3 years
Trademarks 36-40 years
Developed technology 5 years
Intangible assets and goodwill are tested for impairment annually in November of each fiscal year, or whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. Goodwill is tested for impairment using a fair-value based
approach, and is assessed at the reporting unit level, or the lowest level for which discrete financial condition and operating results are
available. The carrying value of the reporting unit is compared to its estimated fair value, with any excess of carrying value over fair
value deemed to be an impairment. Intangible and other long-lived assets are tested for impairment by comparing the carrying value of
the assets to the estimated future undiscounted cash flows to be generated by the asset. If an impairment is determined to exist for
goodwill and intangible assets, the carrying value of the asset is reduced to the estimated fair value.
Payments on Long-Term Contracts — The Company makes payments to certain agents and financial institution customers as an incentive
to enter into long-term contracts. The payments, or signing bonuses, are generally required to be refunded pro rata in the event of
nonperformance under, or cancellation of, the contract by the customer. For contracts requiring payments to be refunded, the signing
bonuses are capitalized and amortized over the life of the related contract as such costs are recoverable through future operations or, in
the case of early termination, through penalties or refunds. Amortization of signing bonuses on long-term contracts is recorded in "Fee
commissions expense" in the Consolidated Statements of Loss. The carrying values of the signing bonuses are reviewed annually or
whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. Signing bonuses for contracts
that do not require a refund in the event of nonperformance or cancellation are expensed upon payment in "Fee commissions expense" in
the Consolidated Statements of Loss.
Income Taxes — The provision for income taxes is computed based on the pre-tax loss included in the Consolidated Statements of Loss.
Deferred income taxes result from temporary differences between the financial reporting basis of assets and liabilities and their respective
tax-reporting basis. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to reverse. Valuation allowances are recorded to reduce deferred tax assets when
it is more likely than not that a tax benefit will not be realized.
The Company adopted accounting guidance that addresses accounting for uncertainty in income taxes on January 1, 2007. The
cumulative effect of applying this guidance was reported as a $22.0 million reduction to the opening balance of retained income. The
liability for unrecognized tax benefits is recorded as a non-cash item in "Accounts payable and other liabilities" in the Consolidated
Balance Sheets. The Company records interest and penalties for unrecognized tax benefits in "Income tax (benefit) expense" in the
Consolidated Statements of Loss. See Note 15 — Income Taxes for further discussion.
Treasury Stock — Repurchased common stock is stated at cost and is presented as a separate reduction of stockholders' deficit. See
Note 13 — Stockholders' Deficit for further discussion.
Foreign Currency Translation — The Company converts assets and liabilities of foreign operations to their United States dollar
equivalents at rates in effect at the balance sheet dates, recording the translation adjustments
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