Orbitz 2009 Annual Report Download - page 78

Cash and Cash Equivalents
We consider highly liquid investments purchased with an original maturity of three months or less to be
cash equivalents. These short-term investments are stated at cost, which approximates market value.
Allowance for Doubtful Accounts
Our accounts receivable are reported in our consolidated balance sheets net of an allowance for doubtful
accounts. We provide for estimated bad debts based on our assessment of our ability to realize receivables,
considering historical collection experience, the general economic environment and specific customer informa-
tion. When we determine that a receivable is not collectable, the account is written-off. Bad debt expense is
recorded in selling, general and administrative expenses in our consolidated statements of operations. We
recorded bad debt expense of almost nil, $2 million, almost nil and $1 million during the years ended
December 31, 2008 and December 31, 2007 and the periods from August 23, 2006 to December 31, 2006 and
January 1, 2006 to August 22, 2006, respectively.
Property and Equipment, Net
Property and equipment is recorded at cost, net of accumulated depreciation and amortization. We
depreciate and amortize property and equipment over their estimated useful lives using the straight-line
method. The estimated useful lives by asset category are:
Asset Category Estimated Useful Life
Leasehold improvements. ............ Shorter of asset’s useful life or non-cancelable lease term
Capitalized software ................ 3-10years
Furniture, fixtures and equipment ...... 3-7years
We capitalize the costs of software developed for internal use in accordance with Statement of Position
(“SOP”) No. 98-1, “Accounting for the Costs of Computer Software Developed or Obtained for Internal Use”
(“SOP 98-1”) and EITF Issue No. 00-2, “Accounting for Website Development Costs.” Capitalization
commences when the preliminary project stage of the application has been completed and it is probable that
the project will be completed and used to perform the function intended. Amortization commences when the
software is placed into service.
We also capitalize interest on internal software development projects in accordance with SFAS No. 34,
“Capitalization of Interest Cost,” and SOP 98-1. The amount of interest capitalized is computed by applying
our weighted average borrowing rate to the average amount of accumulated expenditures in the period. We
capitalized $1 million and $3 million of interest during the years ended December 31, 2008 and December 31,
2007, respectively, and $0 of interest during the periods from August 23, 2006 to December 31, 2006 and
January 1, 2006 to August 22, 2006.
We evaluate the recoverability of our long-lived assets, including property and equipment and finite-lived
intangible assets, when circumstances indicate that the carrying value of those assets may not be recoverable
pursuant to SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” This analysis
is performed by comparing the carrying values of the assets to the current and expected future cash flows to
be generated from these assets, on an undiscounted basis. If this analysis indicates that the carrying value of
an asset is not recoverable, the carrying value is reduced to fair value through an impairment charge in our
consolidated statements of operations.
Goodwill, Trademarks and Other Intangible Assets
Goodwill represents the excess of the purchase price over the estimated fair value of the underlying assets
acquired and liabilities assumed in the acquisition of a business. We assign goodwill to reporting units that are
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ORBITZ WORLDWIDE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)