Overstock.com 2012 Annual Report Download - page 98

Table of Contents
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lease costs on a straight-line basis without regard to deferred payment terms, such as rent holidays that defer the commencement date of required
payments. Additionally, tenant improvement allowances are amortized as a reduction in rent expense over the term of the lease. Leasehold improvements
are capitalized at cost and amortized over the lesser of their expected useful life or the life of the lease, without assuming renewal features, if any, are
exercised.
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We account for treasury stock under the cost method and include treasury stock as a component of stockholders' equity.
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Other long-term assets consist primarily of long-term prepaid expenses.
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We review property and equipment and other long-lived assets for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset group may not be recoverable. Recoverability is measured by comparison of the assets' carrying amount to future
undiscounted net cash flows the asset group is expected to generate. Cash flow forecasts are based on trends of historical performance and
management's estimate of future performance, giving consideration to existing and anticipated competitive and economic conditions. If such asset group
is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds their fair
values. There were no impairments to long-lived assets recorded during the years ended December 31, 2012, 2011, and 2010.
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Goodwill represents the excess of the purchase price paid over the fair value of the tangible net assets acquired in business combinations.
Goodwill is not amortized but is tested for impairment at least annually. When evaluating whether goodwill is impaired, we make a qualitative
assessment to determine if it is more likely than not that its fair value is less than its carrying amount. If the qualitative assessment determines that it is
more likely than not that its fair value is less than its carrying amount, we compare the fair value of the reporting unit to which the goodwill is assigned
to its carrying amount. If the carrying amount exceeds its fair value, then the amount of the impairment loss must be measured. The impairment loss, if
any, is calculated by comparing the implied fair value of the goodwill to its carrying amount. In calculating the implied fair value of goodwill, the fair
value of the reporting unit is allocated to the other assets and liabilities within the reporting unit based on estimated fair value. The excess of the fair
value of a reporting unit over the amount allocated to its other assets and liabilities is the implied fair value of goodwill. An impairment loss is
recognized when the carrying amount of goodwill exceeds its implied fair value.
In accordance with this guidance, we test for impairment of goodwill in the fourth quarter or when we deem that a triggering event has occurred.
Goodwill totaled $2.8 million at December 31, 2012 and
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