Overstock.com 2012 Annual Report Download - page 97
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Table of Contents
Fixed assets, which include assets such as technology infrastructure, internal-use software, website development, furniture and fixtures and
leasehold improvements, are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the related assets or the
term of the related capital lease, whichever is shorter, as follows:
Leasehold improvements are amortized over the shorter of the term of the related leases or estimated useful lives.
Depreciation and amortization expense is classified within the corresponding operating expense categories on the consolidated statements of
operations as follows (in thousands):
Upon sale or retirement of assets, cost and related accumulated depreciation and amortization are removed from the balance sheet and the resulting
gain or loss is reflected in the consolidated statements of operations.
Included in fixed assets is the capitalized cost of internal-use software and website development, including software used to upgrade and enhance
our Website and processes supporting our business. We capitalize costs incurred during the application development stage of internal-use software and
amortize these costs over the estimated useful life of two to three years. Costs incurred related to design or maintenance of internal-use software are
expensed as incurred.
During the years ended December 31, 2012 and 2011, we capitalized $8.2 million and $9.6 million, respectively, of costs associated with internal-
use software and website development, both developed internally and acquired externally. Amortization of costs associated with internal-use software
and website development was $8.2 million and $8.0 million for those respective periods.
We account for lease agreements as either operating or capital leases depending on certain defined criteria. In certain of our lease agreements, we
receive rent holidays and other incentives. We recognize
F-10
Computer software 2 - 3
Computer hardware 3
Furniture and equipment 3 - 5
Cost of goods sold—direct $ 470 $ 714 $ 1,179
Technology 14,177 14,433 12,489
General and administrative 1,362 1,203 912
Total depreciation and amortization, including internal-use software and website
development $ 16,009 $ 16,350 $ 14,580